Dreger – Tax Court of Canada finds that a distribution from a deceased father’s fund to his surviving children was a related-person transfer

The taxpayers were the named beneficiaries of a life income fund held by their late father. In reliance on Kiperchuk (which found a taxpayer not to be related to her deceased husband respecting a transfer following his death) they argued that the resulting distributions to them were from an arm’s length person, so that s. 160 did not apply to them respecting their deceased father’s tax debts. In rejecting their appeals, D'Arcy J stated:

I agree with [Kiperchuk] that under the relevant provincial law the statutory status of marriage was ended by death. However, the relationship of father and child is not a statutory relationship; it is a factual relationship. … [T]he Appellants are [still] the children of …[their father].

Neal Armstrong. Summary of Dreger v. The Queen, 2020 TCC 25 under s. 251(6)(a).