Smith – Tax Court of Canada finds that two individuals jointly controlling a company were acting in concert respecting the payment of dividends so as to engage s. 160
Two individuals held their 50-50 Opco through a holding company held by a family trust, in the case of Mr Smith, and through a family trust in the case of Mr Scott. Whether unpaid tax liabilities attached under s. 160 to dividends paid regularly by the Opco, for distribution up the chain, turned on whether they were not dealing at arm’s length with Opco. Although each did not control Opco, D’Arcy J followed Fournier in finding that they were acting in concert respecting the payment of the Opco dividends, so that s. 160 so applied:
Mr. Smith and Mr. Scott as the Operating Company’s only directors and officers acted in concert and with a common economic interest to decide how they would withdraw the profits made by the Operating Company for their personal use.
Neal Armstrong. Summary of HLB Smith Holdings Limited v. The Queen, 2018 TCC 83 under s. 251(1)(c).