Tremblay,
T.C.J.:
—This
appeal
was
heard
on
January
12,
1988
in
the
city
of
Montréal,
Quebec.
1.
Point
at
Issue
According
to
the
notice
of
appeal
and
the
reply
to
the
notice
of
appeal,
the
question
is
whether
in
computing
his
tax
for
1985
the
appellant
correctly
treated
the
sum
of
$149,464.95
as
not
owed
by
him.
This
amount
was
previously
owed
by
his
wife,
who
went
bankrupt
in
November
1984.
The
appellant
contended
that
he
owed
his
wife
absolutely
nothing.
In
September
1979,
Marie-Rose
Basque
signed
a
private
document
stating
that
the
appellant
owed
her
nothing
on
the
demand
note
of
$33,000
and
other
notes
to
be
issued,
on
condition
that
he
did
not
change
his
existing
Will
leaving
everything
to
his
wife.
However,
according
to
the
respondent
on
December
21,
1983
husband
and
wife
signed
a
gratuitous
contract
containing
an
irrevocable
gift
inter
vivos
to
the
appellant
of
all
amounts
owed
by
him
to
his
wife
under
notes
appearing
on
the
appellant's
1982
balance
sheet
and
totalling
$226,388.
The
respondent
maintained
that
because
of
these
facts
subsection
160(2)
of
the
Income
Tax
Act
applies
and
the
tax
debt
owed
by
the
wife,
Marie-Rose
Basque,
becomes
the
appellant's
debt.
2.
Burden
of
Proof
2.01
The
appellant
has
the
burden
of
showing
that
the
respondent's
assessments
are
incorrect.
This
burden
of
proof
results
from
several
judicial
decisions,
including
a
judgment
of
the
Supreme
Court
of
Canada
in
Johnston
v.
M.N.R.,
[1948]
S.C.R.
486,
[1948]
C.T.C.
195,
3
D.T.C.
1182.
2.02
In
the
same
judgment,
the
Court
held
that
the
facts
assumed
by
the
respondent
in
support
of
the
assessments
or
reassessments
are
also
presumed
to
be
true
until
the
contrary
is
shown.
The
facts
presumed
by
the
respondent
in
the
instant
case
are
described
in
paragraph
2(a)
to
(f)
of
the
respondent's
reply
to
the
notice
of
appeal.
This
paragraph
reads
as
follows:
2.
In
assessing
the
appellant
for
the
1985
taxation
year
the
respondent
relied
inter
alia
on
the
following
presumptions
of
fact:
(a)
the
appellant
has
been
married
to
Marie-Rose
Basque
Boisselle
since
1965
under
the
regime
of
separation
of
property
[Exhibit
A-1(A)];
(b)
on
December
21,
1983
Marie-Rose
Basque
Boisselle
owed
the
Department
of
National
Revenue
$149,464.95
pursuant
to
notices
of
reassessment
sent
to
her
on
March
10,
1983
for
the
1977
to
1981
taxation
years;
(c)
objections
were
made
to
the
said
notices
of
reassessment
and
confirmed
by
a
notification
from
the
respondent
on
August
11,
1983;
Marie-Rose
Basque
Boisselle,
who
did
not
appeal
from
the
respondent's
notification,
became
bankrupt
on
November
14,
1984
[Exhibit
A-1(E)];
(d)
on
December
21,
1983
Marie-Rose
Basque
Boisselle
and
the
appellant
signed
a
gratuitous
contract
including
an
irrevocable
gift
inter
vivos
to
the
appellant
of
all
amounts
owed
by
him
to
Marie-Rose
Basque
Boisselle
under
demand
notes
appearing
in
the
liabilities
of
the
appellant's
balance
sheet
[Exhibit
A-1(D)];
(e)
the
appellant's
balance
sheet
at
December
31,
1982
indicates
under
liabilities
notes
payable
to
Marie-Rose
Basque
Boisselle
amounting
to
$226,388
[Exhibit
A-1(F)];
(f)
the
only
payments
made
by
Marie-Rose
Basque
Boisselle
on
the
tax
account
at
issue
total
some
$2,500
and
come
chiefly
from
tax
credits
for
the
taxation
years
1982
and
1983.
3.
Facts
3.01
Admission
by
the
appellant
The
facts
are
not
in
dispute.
The
appellant
admitted
all
the
facts
presumed
by
the
respondent
and
cited
in
paragraph
2.02.
3.02
It
is
however
necessary
to
cite
in
full
the
documents
referred
to
by
the
parties,
which
are
the
factual
basis
of
the
parties’
arguments.
3.02.1
The
private
document
issued
on
September
30,
1979
(Exhibit
A-1(B))
reads
as
follows:
I,
Marie
Basque,
acknowledge
that
Pierre
Boisselle,
to
whom
I
made
a
demand
note
for
$33,000
on
January
5,
1979,
shall
not
be
required
to
repay
me
the
said
note
or
others
to
be
made
provided
that,
on
his
death
or
separation,
he
shall
not
have
altered
or
changed
his
will
made
in
1976
as
minutes
20855
before
Mr.
H.
Poitevin,
in
which
it
is
clearly
stated
that
everything
owned
by
Pierre
Boisselle
shall
be
bequeathed
to
his
wife
Marie
Basque,
including
his
life
insurance
policies
which
will
also
be
bequeathed
to
her.
3.02.2
Exhibit
A-1(C)
consists
of
a
series
of
notes
extending
from
1979
to
1982
issued
by
the
appellant
to
his
wife.
All
these
notes
total
$161,100.
Among
the
notes
filed
is
also
a
document
dated
June
18,
1980
concerning
a
gift
of
two
properties.
It
reads
as
follows:
I,
Marie
Basque,
certify
that
the
two
houses
located
at
4904-06-08
and
4910-12-14
have
become
the
property
of
my
husband
Pierre
Boisselle
in
accordance
with
my
decision
to
assist
him
with
the
future
expansion
of
his
brewery.
As
a
consequence
of
these
two
sales,
Pierre
Boisselle,
my
husband,
shall
not
be
required
to
repay
me
the
capital
difference
of
$30,000,
and
interest,
provided
that
on
his
death
or
separation
his
will
made
on
September
28,
1976
as
minutes
20855
before
Mr.
Henri
Poitevin
remains
unchanged,
namely
that
all
his
movable
and
immovable
property
is
bequeathed
to
Marie
Basque
in
its
entirety
and
that
all
his
life
insurance
policies
are
also
bequeathed
to
the
said
Marie
Basque.
3.02.3
The
notarized
gift
dated
December
21,1983
before
the
notary
Henri
Poitevin
as
No.
24,339
of
his
minutes
and
duly
registered
on
January
5,
1984
as
No.
3433988
(Exhibit
A-1(D))
reads
as
follows:
BEFORE
Mr.
HENRI
POITEVIN,
undersigned
notary
for
the
province
of
Quebec,
practising
in
the
city
of
Montréal;
APPEARED:
MARIE-ROSE
BASQUE,
domiciled
in
the
city
of
Saint-
Léonard,
province
of
Quebec
(address:
9027
rue
Lacordaire),
the
wife
of
PIERRE
BOISSELLE;
Hereinafter
referred
to
as
"the
Donor"
AND:
PIERRE
BOISSELLE,
domiciled
in
the
city
of
Saint-Léonard,
province
of
Quebec
(address:
9027
rue
Lacordaire),
a
businessman;
Hereinafter
referred
to
as
"the
Donee"
WHO
AGREE
as
follows:
1.
The
donor
hereby
makes
an
irrevocable
gift
inter
vivos
to
the
donee
of
all
amounts
owed
to
her
as
appears
in
the
notes
made
out
to
her
and
appearing
on
the
donee's
balance
sheet.
2.
The
donee
accepts
the
said
gift.
THE
FOREGOING
CONSTITUTES
LEGAL
PUBLICATION:
DONE
in
the
city
of
Montréal
on
December
21,
1983
as
No.
24,339
of
the
minutes
of
the
undersigned
notary.
Reading
having
been
made,
the
parties
appearing
have
signed
with
and
in
the
presence
of
the
said
notary.
(signed)
Marie-Rose
Basque
(signed)
Pierre
Boisselle
(signed)
Henri
Poitevin,
Notary
A
true
copy
of
the
original
kept
in
my
files.
3.02.4
The
financial
statements
of
Brasserie
Canne
à
Pommeau
d'Or
Enregistrée
(owned
by
Pierre
Boisselle)
for
1982
were
filed
as
Exhibit
A-1(F).
The
liabilities
in
the
balance
sheet
show
$226,338
as
notes
payable
to
Marie-Rose
Basque
Boisselle,
according
to
note
5
of
the
said
financial
statements.
3.02.5
The
contract
of
gift
(Exhibit
A-1(D))
is
the
basis
of
notice
of
assessment
No.
520885
issued
by
the
respondent
on
January
22,
1985
(Exhibit
A-2).
The
amount
of
tax
owed
is
$149,464.95.
The
said
notice
of
assessment
makes
no
mention
of
any
taxation
year.
The
note
which
is
part
of
this
notice
of
assessment
reads
as
follows:
This
assessment
is
made
pursuant
to
the
provisions
of
s.
160(2)
of
the
Income
Tax
Act
and
concerns
a
transfer
on
or
about
December
21,
1983
from
Rose
Boisselle
(Marie
Basque)
to
Pierre
Boisselle,
pursuant
to
the
registration
of
a
deed
of
gift
by
Marie-Rose
Basque
to
Pierre
Boisselle.
3.02.6
The
Minister’s
notice
of
ratification
issued
on
November
18,
1985
(Exhibit
A-3)
reads
as
follows:
The
formal
objection(s)
made
by
you
to
the
notice(s)
of
assessment
of
income
tax
for
the
year(s)
1985
has/have
been
carefully
examined
pursuant
to
s.
165(3)(a)
of
the
Income
Tax
Act.
The
Minister
of
National
Revenue
has
considered
the
facts
and
reasons
stated
in
your
notice(s)
of
objection
and
hereby
confirms
the
said
assessment(s)
as
having
been
made
in
accordance
with
the
provisions
of
the
Income
Tax
Act,
for
the
following
reasons.
Whereas
an
income
tax
assessment
has
been
made
in
respect
of
the
taxpayer
by
notice
of
assessment
520885;
[and]
whereas
s.
160(2)
of
the
Act
provides
that
the
Department
[sic]
may
at
any
time
assess
the
transferee
in
respect
of
any
amount
payable
under
s.
160(2)
of
the
said
Act;
whereas
therefore
the
taxpayer's
tax
assessment
has
been
made
in
the
amount
of
$149,464.95
for
the
property
directly
or
indirectly
transferred
to
him
by
his
spouse
on
or
about
December
21,
1983,
in
accordance
with
the
provisions
of
s.
160(1)
of
the
said
Act.
4.
Act
-
Case
Law
—
Analysis
4.01
Act
The
principal
provisions
of
the
Income
Tax
Act
applicable
in
the
instant
appeal
are
paragraphs
160(1)(a)
and
(e)
and
subsections
(2)
and
248(1)
(definition
of
the
word
"property").
They
read
as
follows:
160.
(1)
Where
a
person
has,
on
or
after
the
1st
day
of
May,
1951,
transferred
property,
either
directly
or
indirectly,
by
means
of
a
trust
or
by
any
other
means
whatever,
to
(a)
his
spouse
or
a
person
who
has
since
become
his
spouse,
the
following
rules
apply:
(e)
the
transferee
and
transferor
are
jointly
and
severally
liable
to
pay
under
this
Act
an
amount
equal
to
the
lesser
of
(i)
the
amount,
if
any,
by
which
the
fair
market
value
of
the
property
at
the
time
it
was
transferred
exceeds
the
fair
market
value
at
that
time
of
the
consideration
given
for
the
property,
and
(ii)
the
aggregate
of
all
amounts
each
of
which
is
an
amount
that
the
transferor
is
liable
to
pay
under
this
Act
in
respect
of
the
taxation
year
in
which
the
property
was
transferred
or
of
any
preceding
taxation
year,
but
nothing
in
this
subsection
shall
be
deemed
to
limit
the
liability
of
the
transferor
under
any
other
provision
of
this
Act.
(2)
The
Minister
may
at
any
time
assess
a
transferee
in
respect
of
any
amount
payable
by
virtue
of
this
section
and
the
provisions
of
this
Division
are
applicable
mutatis
mutandis
in
respect
of
an
assessment
made
under
this
section
as
though
it
had
been
made
under
section
152.
248.
(1)
In
this
Act,
"property"
means
property
of
any
kind
whatever
whether
real
or
personal
or
corporeal
or
incorporeal
and,
without
restricting
the
generality
of
the
foregoing,
includes
(a)
a
right
of
any
kind
whatever,
a
share
or
a
chose
in
action,
(b)
unless
a
contrary
intention
is
evident,
money,
(c)
a
timber
resource
property,
and
(d)
the
work
in
progress
of
a
business
that
is
a
profession
.
.
.
4.02
Case
law
and
academic
commentary
The
parties
referred
the
Court
to
the
following
case
law
and
academic
commentary:
1.
The
Queen
v.
Ketz,
[1979]
C.T.C.
186;
79
D.T.C.
5142
(F.C.T.D.);
2.
Thorsteinson
v.
M.N.R.,
[1980]
C.T.C.
2415;
80
D.T.C.
1369
(T.R.B.);
3.
The
Queen
v.
Zoël
Chicoine
Inc.,
[1987]
2
C.T.C.
320;
87
D.T.C.
5247
(F.C.A.);
4.
Zoël
Chicoine
v.
The
Queen,
[1985]
2
C.T.C.
320;
86
D.T.C.
6251
(F.C.T.D.);
5.
Victory
Hotels
Ltd.
v.
M.N.R.,
[1962]
C.T.C.
614;
62
D.T.C.
1378;
6.
Dunkelman
v.
M.N.R.,
[1959]
C.T.C.
375;
59
D.T.C.
1242;
7.
J.W.
Baker
Agency
(1976)
Ltd.
v.
The
Queen,
[1988]
1
F.C.
157;
[1988]
1
C.T.C.
8;
88
D.T.C.
6032;
8.
The
Queen
v.
Compagnie
Immobilière
BCN
Ltée,
[1979]
S.C.R.
865;
[1979]
C.T.C.
71;
79
D.T.C.
5068;
9.
Highway
Sawmills
Ltd.
v.
M.N.R.,
[1966]
S.C.R.
384;
[1966]
C.T.C.
150;
66
D.T.C.
5116
(S.C.C.);
10.
Johns-Manville
Canada
Inc.
v.
The
Queen,
[1985]
2
C.T.C.
111;
85
D.T.C.
5373
(S.C.C.);
11.
Fisher
v.
M.N.R.,
[1979]
C.T.C.
2771;
79
D.T.C.
661
(T.R.B.);
12.
Succession
Fasken
v.
M.N.R.,
[1948]
Ex.
C.R.
580;
[1948]
C.T.C.
265;
49
D.T.C.
491;
13.
Laurin
v.
M.N.R.,
[1960]
C.T.C.
194,
20
Tax
A.B.C.
114;
60
D.T.C.
1143,
(Ex.
Ct.);
14.
Claire
F.L.
Young,
"The
Attribution
Rules:
Their
Uncertain
Future
in
the
Light
of
Current
Problems",
Revue
fiscale
canadienne,
March-April
1987,
Vol.
35,
No.
2,
p.
275.
4.03
Analysis
4.03.1
The
appellant's
arguments
In
brief,
counsel
for
the
appellant
submitted
three
propositions.
The
first
is
that
the
correct
taxation
year
is
1983,
not
1985
as
assessed
by
the
respondent.
The
second
proposition
is
that
in
law
the
deed
of
gift
of
December
21,
1983
is
a
debt
release,
and
a
debt
release
is
not
a
transfer
of
property
within
the
meaning
of
section
160
of
the
Act.
Finally,
the
third
proposition,
already
stated
in
the
notice
of
appeal
and
an
alternative
proposition,
is
that
in
September
1979
there
was
a
deed
of
gift
by
the
appellant's
wife
to
him
releasing
all
amounts
then
owed
or
to
be
owed.
Accordingly,
if
there
was
a
transfer
it
took
place
in
1979.
4.03.2
The
appellant's
first
proposition:
taxation
year
is
not
1985
but
1983
4.03.2.(1)
Section
160
is
a
taxing
section,
and
as
such
if
there
is
any
doubt
as
to
its
application
it
must
be
construed
in
favour
of
the
taxpayer.
It
must
be
given
a
very
strict
construction,
for
it
makes
the
taxpayer
liable
for
tax
owed
by
someone
else.
This
other
person,
who
is
indebted
to
the
Minister
of
National
Revenue
and
is
the
taxpayer's
spouse,
transfers
property
to
the
latter.
This
transfer
essentially
prevents
the
maker
of
the
transfer
from
paying
tax.
In
this
regard,
subsection
160(2)
provides
as
follows:
The
Minister
may
at
any
time
assess
a
transferee
in
respect
of
any
amount
payable
by
virtue
of
this
section
and
the
provisions
of
this
Division
are
applicable
mutatis
mutandis
in
respect
of
an
assessment
made
under
this
section
as
though
it
had
been
made
under
section
152.
Referring
to
paragraph
152(4)(a)
of
the
Act,
counsel
for
the
appellant
noted
that
this
paragraph
also
allows
the
Minister
to
make
a
reassessment.
It
reads
as
follows:
152.
(4)
The
Minister
may
at
any
time
assess
tax,
interest
or
penalties
under
this
Part
or
notify
in
writing
any
person
by
whom
a
return
of
income
for
a
taxation
year
has
been
filed
that
no
tax
is
payable
for
the
taxation
year,
and
may
(a)
at
any
time,
if
the
taxpayer
or
person
filing
the
return
(i)
has
made
any
misrepresentation
that
is
attributable
to
neglect,
carelessness
or
wilful
default
or
has
committed
any
fraud
in
filing
the
return
or
in
supplying
any
information
under
this
Act,
or
(ii)
has
filed
with
the
Minister
a
waiver
in
prescribed
form
within
3
years
from
the
date
of
mailing
of
a
notice
of
an
original
assessment
or
of
a
notification
that
no
tax
is
payable
for
a
taxation
year.
.
.
The
section
then
indicates
the
time
periods
allowed.
Counsel
noted
that
the
reference
to
“this
section”
is
subsection
160(2)
is
to
Division
I
of
Part
1
of
the
Act
covering
sections
151-168,
that
is
the
division
giving
the
Minister
the
power
to
make
assessments.
Counsel
argued
"that
under
section
160
the
Minister
is
authorized
to
assess
a
person
who
would
not
otherwise*
be
assessed.
Once
the
taxpayer's
liability
has
been
established,
all
the
usual
rules
apply”
(trans.
p.
45).
Accordingly,
under
section
152
[sic],
a
taxpayer
must
file
his
tax
return
and
estimate
the
amount
of
tax
payable.
Thus,
counsel
continued,
if
as
the
respondent
maintained
there
was
a
transfer
in
1983
(Exhibit
A-1(D)),
"there
may
have
been
an
obligation”
imposed
on
the
appellant
"to
report
the
amount
of
tax
payable,
but
there
was
none
in
1985"
(trans,
p.
47).
Further,
“1
maintain
that
as
here
for
160
this
comes
under
the
general
scheme
that
the
taxpayer
must
declare,
the
Minister
may
reassess
amounts,
it
is
as
if
there
was
an
amount
included
as
tax
for
the
year,
152(4)
applies
to
that
assessment"
(trans.
p.
49).
According
to
counsel
for
the
appellant,
therefore,
there
was
a
prescription
which
must
also
apply
to
section
160.
If
the
respondent
maintains
that
there
was
no
prescription
for
section
160
and
that
the
assessment
can
be
made
in
any
year,
at
any
time,
then
this
is
not
a
strict
construction
of
section
160,
as
the
section
is
treated
"as
a
completely
separate
and
independent
provision”
(trans,
p.
50).
Counsel
further
wondered
"when
interest
begins
to
run
on
the
amount
that
may
be
due”
(trans.
p.
50);
and
if,
as
the
respondent
says,
he
is
never
bound
by
an
assessment,
can
he
now
assess
a
transfer
made
in
1975?
Subsection
152(4)
is
still
binding
on
section
160
and
imposes
a
prescription.
This
did
not
[preclude]
the
taxpayer's
duty
to
report
amounts.
If
he
does
not
do
so,
the
rules
of
subsection
152(4)
apply.
4.03.2(2)
In
connection
with
subsection
160(2),
counsel
for
the
appellant
referred
to
Thorsteinson
(para.
4.02(2)),
in
which
Taylor,
J.,
then
a
member
of
the
Tax
Review
Board,
said
at
2419:
Both
counsel
proposed
that
while
section
160
of
the
Act
provided
a
method
for
the
Minister
to
collect
tax,
the
only
mechanism
open
to
him
in
order
to
do
so
was
to
issue
an
assessment
under
subsection
(2)
which
reads:
The
Minister
may
at
any
time
assess
a
transferee
in
respect
of
any
amount
payable
by
virtue
of
this
section
and
the
provisions
of
this
Divsion
are
applicable
mutatis
mutandis
in
respect
of
an
assessment
made
under
this
section
as
though
it
had
been
made
under
section
152.
I
would
suggest,
however,
that
a
solid
argument
can
be
made
that
it
is
within
the
power
of
the
Minister
to
proceed
through
normal
legal
channels
to
collect
thereon,
without
issuing
an
assessment.
Accordingly,
as
I
see
it,
the
Minister
implicitly
or
explicitly
elects
either
to
proceed
under
160(1)
through
normal
legal
channels,
or
under
section
160(2)
by
way
of
direct
assessment
against
the
alleged
transferee.
The
assessment
required
by
section
160(2)
is
precisely
that—it
is
not
simply
a
notice
of
assessment
virtually
demanding
payment
and
no
more,
a
process
more
suitable
under
section
160(1).
In
issuing
the
Notice
of
Assessment
dated
January
20,
1978,
the
Minister
"assessed"
this
appellant
for
an
"amount
payable”
under
section
160(2),
which
must
have
been
equated
to
any
amount
that
the
transferor
was
liable
to
pay
under
this
Act
on
the
day
of
the
transfer
as
detailed
in
section
160(1)(d)(i).
It
is
interesting
to
note
that
the
assessment
contains
no
reference
to
particular
taxation
years,
or
even
to
the
related
assessment
of
C.J.T.
Autrement"?
—
T.R.
Counsel
for
the
appellant
maintained
that
Taylor,
J.
did
not
have
to
consider
the
year
at
issue
as
he
allowed
the
appeal
for
another
reason,
namely
that
the
"transferred"
property
had
always
been
owned
by
the
appellant,
not
by
the
maker
of
the
said
transfer.
4.03.2(3)
Counsel
for
the
appellant
also
referred
to
Chicone
(para.
4.02(4)),
where
it
was
clearly
established
that
if
the
Minister
assesses
a
taxpayer
for
a
year
other
than
the
year
in
which
the
income
should
be
included,
the
assessment
should
be
vacated.
4.03.3
The
appellant's
second
proposition:
debt
release
is
not
a
transfer
4.03.3(1)
The
meaning
of
the
word
"transferred"
found
at
the
beginning
of
section
160,
supra,
is
at
the
heart
of
the
problem.
In
the
submission
of
counsel
for
the
respondent,
the
debt
release—
which,
though
it
is
a
legal
act—is
a
passive
act
of
a
person
and
cannot
constitute
a
transfer.
He
referred
to
an
argument
similar
to
that
of
Thurlow,
J.
in
Dunkelman
(para.
4.02(6)).
If
the
legislator
had
intended
to
include
a
debt
release
in
the
word
"transfer",
he
would
have
said
so
clearly
(trans,
pp.
62-63).
In
fact,
he
would
only
have
had
to
use
the
words
“dispose
of”,
which
are
much
wider
than
the
word
"transfer"
(see
Victory
Hotels
Ltd.,
para.
4.02(5)).
In
Dunkelman
(para.
4.02(6)),
Thurlow,
J.
held
that
a
loan
is
not
a
transfer.
Counsel
maintained
that
the
legislator,
to
clarify
his
intent
to
include
a
debt
release
in
a
transfer,
could
as
in
section
73
of
the
Bankruptcy
Act
have
used
a
group
of
situations
or
possibilities:
"Every
conveyance
or
transfer
of
property
or
charge
thereon
made,
every
payment
made,
every
obligation
incurred,
and
every
judicial
proceeding
taken
or
suffered
.
.
.".
Counsel
further
referred
to
the
article
by
Clair
F.L.
Young
(para.
4.02(14))
in
which
at
page
286
she
notes
the
difficulties
of
construction
involved
in
applying
attribution
rules:
One
of
the
difficulties
of
a
detailed
legislative
approach
is
that
if
a
transaction
is
not
specifically
included
in
the
legislation,
there
is
a
good
argument
that
it
is
thereby
excluded
from
the
ambit
of
the
legislation.
The
application
of
the
attribution
rules
to
the
forgiveness
of
a
loan,
for
example,
is
not
dealt
with.
In
the
case
of
section
160
of
the
Act,
counsel
for
the
appellant
continued,
there
is
at
least
ambiguity.
As
this
is
a
taxing
section,
even
an
extraordinary
taxing
section,
the
ambiguity
must
be
interpreted
in
the
taxpayer's
favour.
On
this
last
point,
counsel
referred
to
Johns-Manville
Canada
Inc.
(para.
4.02(10)),
a
judgment
of
the
Supreme
Court
of
Canada
in
1985.
4.03.4
The
appellant's
third
proposition:
there
was
a
gift
in
1979
4.03.4(1)
Referring
to
the
deed
of
gift
signed
by
Marie
Basque
on
September
31,
1979
(Exhibit
A-1(B))
and
cited
in
paragraph
3.02.1,
counsel
for
the
appellant
maintained
that
by
this
document,
"Mrs.
Boisselle
handed
over
money,
loaned
money,
to
her
husband
who
used
it
in
his
business”.
Mrs.
Boisselle
added
"that
these
are
.
.
.
conditional
gifts’,
namely
"provided
there
is
no
separation
or
Mr.
Boisselle
does
not
change
his
will”
(trans,
p.
74).
The
notarized
gift
dated
December
21,
1983
only
confirms
the
1979
document.
Counsel
therefore
maintained
as
an
alternative
argument
that
the
notice
of
assessment
should
have
been
for
1979.
However,
he
admitted
that
in
1979
it
was
impossible
to
tax
"other
notes
to
be
issued”
as
the
document
mentioned.
"These
must
be
taken
at
the
time
they
were
made"
(trans,
p.
75).
4.04
The
respondent's
arguments
4.04.1
Argument
on
the
merits
4.04.1(1)
Between
1977
and
1981
Mrs.
Marie
Basque
Boisselle
accumulated
a
debt
of
$149,464.95
to
the
Department
of
National
Revenue
(a
fact
assumed
and
admitted
in
para.
2.02(2b)).
4.04.1(2)
Mrs.
Marie
Basque
Boisselle
made
loans
to
the
appellant
in
1979
and
subsequently,
so
that
in
late
December
1982
the
amount
the
appellant
owed
his
wife
had
risen
to
$226,388.
4.04.1(3)
This
amount
does
not
revert
to
Mrs.
Boisselle's
funds,
so
that
her
tax
debt
remains
unpaid.
4.04.1(4)
What
is
the
reason
for
this?
In
1979,
by
a
deed
under
private
seal
(Exhibit
A-1(B)),
and
in
1983,
this
time
by
a
notarized
deed
(Exhibit
A-1(D)),
Mrs.
Marie
Basque
Boisselle
made
a
gift
to
her
husband
of
all
moneys
owed
her
by
him.
4.04.1(5)
By
doing
so
Mrs.
Boisselle
reduced
her
funds
and
at
the
same
time
increased
those
of
the
appellant
by
this
amount.
She
therefore
transferred
this
amount
to
her
husband.
This
is
the
case
covered
by
section
160,
whether
the
parties
to
the
transactions
are
in
good
faith
or
not.
After
referring
to
the
first
line
of
section
160,
"Where
a
person
has
.
.
.
transferred
property,
either
directly
or
indirectly",
counsel
for
the
respondent
referred
to
the
meaning
of
the
word
property
in
subsection
248(1),
supra
(para.
4.01):
"property"
means,
inter
alia,
"a
right
of
any
kind
whatever".
Further,
referring
to
Fasken
(para.
4.02(12))
he
cited
Thorson,
P.
at
496:
The
word
"property"
is
a
term
of
wide
import.
The
New
English
Dictionary
gives
the
following
as
one
of
its
definitions:
2.
That
which
one
owns;
a
thing
or
things
belonging
to
or
owned
by
some
person
or
persons;
a
possession
(usually
material),
or
possessions
collectively;
(one’s)
wealth
or
goods.
And
Webster's
New
International
Dictionary,
Second
Edition,
puts
it
similarly
as
follows:
5.
That
to
which
a
person
has
a
legal
title;
thing
owned;
an
estate;
whether
in
lands,
goods,
money
or
intangible
rights,
such
as
copyright,
patent
rights,
etc.
;
anything,
or
those
things
collectively;
in
or
to
which
a
man
has
a
right
protected
by
law;
In
his
submission,
the
amount
of
$226,388
owed
by
her
husband
is
undoubtedly
property.
4.04.2
Whether
debt
release
a
transfer
4.04.2(1)
In
support
of
his
argument
that
a
debt
release
is
a
transfer,
counsel
for
the
respondent
first
pointed
to
the
two
adverbs
"directly
or
indirectly”
which
qualify
the
words
"transferred
property"
at
the
start
of
section
160
of
the
Act,
supra.
4.04.2(2)
Further,
counsel
submitted,
these
two
adverbs
take
on
a
wider
meaning
if
one
considers
that
the
word
"transfer"
“is
another
term
of
large
meaning",
as
Thorson,
P.
observed
in
Fasken
(para.
4.02(12))
again
at
496
and
497:
The
New
English
Dictionary
gives
this
meaning
of
it:
2.
Law.
To
convey
or
make
over
(title,
right
or
property)
by
deed
or
legal
process.
And
Webster's
New
International
Dictionary,
Second
Edition,
says:
2.
To
make
over
the
possession
or
control
of,
to
make
transfer
of;
to
pass;
to
convey,
as
a
right,
from
one
person
to
another;
as,
title
to
land
is
transferred
by
deed.
In
Gathercole
v.
Smith
(1880-81)
17
Ch.
D.
1
at
7,
James
L.J.
spoke
of
the
work
“transfer”
as
"one
of
the
widest
terms
that
can
be
used,”
and
Lush
L.J.
said,
at
page
9:
The
word
“transferable,”
I
agree
with
Lord
Justice
James,
is
a
word
of
the
widest
import
and
includes
every
means
by
which
the
property
may
be
passed
from
one
person
to
another.
The
word
"transfer"
is
not
a
term
of
art
and
has
not
a
technical
meaning.
It
is
not
necessary
to
a
transfer
of
property
from
a
husband
to
his
wife
that
it
should
be
made
in
any
particular
form
or
that
it
should
be
made
directly.
All
that
is
required
is
that
the
husband
should
so
deal
with
the
property
as
to
divest
himself
of
it
and
vest
it
in
his
wife,
that
is
to
say,
pass
the
property
from
himself
to
her.
The
means
by
which
he
accomplishes
this
result,
whether
direct
or
circuitous,
may
properly
be
called
a
transfer.
In
Fisher
(para.
4.02(11)),
again
on
the
interpretation
of
the
word
"transferred"
in
section
160,
reference
is
made
at
2775
C.T.C.
to:
The
Random
House
Dictionary
of
the
English
Language
says
of
the
word
"transfer:"
“15.
Law.
a
conveyance,
by
sale,
gift,
or
otherwise,
of
real
or
personal
property,
to
another".
As
no
consideration
was
paid
by
the
appellant
to
his
wife,
the
cancellation
of
the
debt
becomes
a
transfer
in
the
wider
sense,
counsel
for
the
respondent
concluded.
4.04.3
Whether
Minister
assessed
correct
year
4.04.3(1)
Counsel
for
the
respondent
noted
that
on
the
notice
of
assessment
(Exhibit
A-2,
para.
3.02.4),
there
is
no
reference
to
a
taxation
year.
"There
is
none
—
moreover,
this
is
why
you
have
an
assessment
issued
with
a
number,
there
is
no
taxation
year
in
question
for
the
recipient"
(trans,
pp.
90-91).
4.04.3(2)
As
to
the
fact
that
the
notice
of
notification
mentions
the
taxation
year
1985
(para.
3.02.6),
counsel
added:
Further,
the
notice
of
notification
cannot
be
used
to
argue
that
the
Minister
chose
a
year,
because
this
is
simply
a
matter
of
procedure,
and
if
there
are
clerical
errors
in
the
notice
this
does
not
fundamentally
vitiate
the
assessment.
He
referred
in
this
regard
to
Laurin
(para.
4.02(13)),
in
which
Dumoulin,
J.
had
to
decide
two
preliminary
objections
regarding
the
validity
of
the
notices
of
assessment
at
issue.
Inter
alia,
they
did
not
provide
sufficient
explanation
regarding
the
additional
tax
claimed.
Dumoulin,
J.
referred
inter
alia
to
subsections
46(3)
and
(7)
of
the
old
Act,
which
is
subsections
152(3)
and
(8)
of
the
new
Act.
These
subsections
read
as
follows:
152.
(2)
After
examination
of
a
return,
the
Minister
shall
send
a
notice
of
assessment
to
the
person
by
whom
the
return
was
filed.
(8)
An
assessment
shall,
subject
to
being
varied
or
vacated
on
an
objection
or
appeal
under
this
Part
and
subject
to
a
reassessment,
be
deemed
to
be
valid
and
binding
notwithstanding
any
error,
defect
or
omission
therein
or
in
any
proceeding
under
this
Act
relating
thereto.
Dumoulin,
J.
then
made
the
following
observation:
Such
language
proves
rather
clearly
that
the
intention
of
the
legislator
is
to
advise
against
a
rigid
interpretation
of
the
procedure
and
application
of
his
Act.
The
tangible
manifestation
of
an
assessment,
the
notice,
remains
the
accessory;
it
is
without
doubt
indispensable,
but
it
is
the
tangible
accessory
of
an
intangible
lawful
act,
namely
the
assessment
issued
by
the
Minister.
The
President
of
this
Court,
Mr.
Justice
Thorson,
wrote
the
following
in
the
case
of
Pure
Spring
Company
Limited
v.
Minister
of
National
Revenue,
[1946]
Ex.
C.R.
at
page
500
[2
D.T.C.
844]:
The
assessment
is
different
from
the
notice
of
assessment;
the
one
is
an
operation,
the
other
a
piece
of
paper.
.
.
On
the
other
hand,
counsel
concluded
that
"the
notice
of
notification
is
a
procedural
aspect
of
the
deed.
Any
error
in
this
notice
does
not
affect
the
basis
of
the
assessment"
(trans,
p.
96).
4.04.3(3)
On
the
other
hand,
however,
is
the
Minister’s
notice
of
assessment
valid
because
it
does
not
mention
a
year
of
assessment?
Counsel
referred
to
the
fundamental
sections
2,
3
and
4
of
the
Income
Tax
Act,
where
it
states
that
"[a]
.
.
.
tax
shall
be
paid
.
.
.
upon
the
taxable
income
for
each
taxation
year.
.
."
(s.
2);
that
net
income
for
a
taxation
year
is
determined
from
various
sources
of
income:
an
office,
employment,
business
or
property
(s.
3).
Taxable
income
is
calculated
from
net
income
by
making
certain
deductions
allowed
by
law:
charitable
gifts,
expenses
of
illness,
exemptions,
always
within
a
taxation
year.
"This
is
why,"
counsel
said,
"reference
must
be
made
to
a
specific
taxation
year."
Counsel
submitted
that
in
the
case
of
section
160,
the
maker
of
a
transfer
is
not
a
source
of
income
for
the
transferee,
and
there
is
no
taxable
income
in
the
year
in
which
the
transfer
is
made.
There
is
therefore
no
taxation
year.
Section
160
is
only
a
provision
allowing
for
recovery
from
the
transferee
of
the
tax
of
his
spouse,
the
maker
of
the
transfer,
as
the
said
transfer
renders
its
maker
incapable
of
paying
tax.
4.04.3(4)
Counsel
maintained
that
the
appellant
can
be
assessed
at
any
time:
there
is
no
question
of
a
prescription
for
the
transferee.
In
Fasken
(para.
4.02(12)),
the
assessment
was
made
in
1944,
though
the
transfers
took
place
between
1925
and
1929.
In
practice,
it
is
unlikely
that
a
transferee
will
himself
pay
tax
owed
by
his
spouse
in
the
year
in
which
the
transfer
of
property
was
made.
Further,
it
is
impossible
for
the
Department
to
know
this.
For
the
section
to
be
applicable,
the
respondent
must
be
able
to
act
at
any
time.
It
is
the
maker
of
the
transfer
who
can
rely
on
prescription,
when
his
tax
is
determined.
It
is
recognized,
however,
that
if
the
maker
of
the
transfer
does
not
appeal
the
transferee,
when
a
notice
of
assessment
is
issued
against
him
claiming
payment
of
tax
owed
by
the
maker
of
the
transfer,
can
plead
reasons
not
put
forward
at
the
proper
time
and
place
by
the
maker
of
the
transfer
(Thorstein-
son,
para.
4.02(2)).
4.04.3(5)
Finally,
counsel
for
the
respondent
submitted
that
even
though
in
subsection
160(2)
it
states
that
“the
provisions
of
this
Division
are
applicable
mutatis
mutandis
in
respect
of
an
assessment
made
under
this
section
as
though
it
had
been
made
under
section
152",
these
provisions
apply
only
mutatis
mutandis,
that
is
“in
so
far
as
possible”.
While
section
152
specifies
“for
a
taxation
year"
and
states
that
the
Minister
must
act
with
due
despatch,
subsection
160(2)
does
not
specify
this
and
states
that
the
Minister
may
"at
any
time"
.
.
.
4.05
Whether
transfer
took
place
in
1979
In
the
submission
of
counsel
for
the
respondent,
(Exhibit
A-1(B))
signed
on
September
30,
1979,
showing
debt
releases
subject
to
conditions
both
for
existing
and
for
future
debts,
is
only
a
statement
of
intent.
The
deed
of
gift
on
December
21,
1983
(Exhibit
A-1(D))
in
any
case
cancelled
Exhibit
A-1(B))
of
September
30,
1979.
4.06
Opinion
of
the
Court
4.06.1
Strict
construction
of
section
160
The
Court
agrees
with
counsel
for
the
appellant
that
section
160
should
be
strictly
construed
as
it
is
an
exception
to
the
general
rule
regarding
taxing
sections.
The
general
rule
is
that
a
taxpayer
is
taxed
on
his
own
income.
If
then
the
taxing
section
applies
squarely
only
to
the
facts
of
the
case
and
if
construction
of
the
section
is
ambiguous,
the
doubt
must
be
resolved
in
the
taxpayer's
favour
and
no
tax
is
payable.
A
first
exception
is
including
in
the
taxpayer's
income
the
income
of
someone
else,
as
in
section
74.1
for
example,
where
inter
alia
a
taxpayer
transfers
an
income-producing
property
to
his
spouse.
The
maker
of
the
transfer
must
be
taxed
on
the
income
from
this
property.
Such
a
section
must
be
construed
even
more
strictly.
A
second
exception,
as
provided
in
section
160,
is
to
make
a
taxpayer
responsible
for
tax
owed
by
someone
else,
namely
his
spouse.
Where
the
latter
has
transferred
property
to
the
taxpayer
and
so
become
financially
unable
to
pay
tax,
it
is
the
transferee
taxpayer
who
will
be
responsible
for
the
tax
owed
by
the
maker
of
the
transfer
at
the
time
of
the
transfer.
It
goes
without
saying
that
such
a
section
must
be
construed
even
more
strictly.
Accordingly,
the
word
"transferred"
found
in
the
beginning
of
subsection
160(1)
takes
on
greater
importance,
as
does
the
application
mutatis
mutandis
of
subsection
160(2),
including
chiefly
the
taxation
year
in
question
and
prescription.
4.06.2
"Transfer"
Though
section
160
must
be
construed
very
strictly,
the
word
"transferred",
as
it
has
a
general
rather
than
a
technical
meaning,
must
be
construed
as
such
with
respect
to
the
facts
of
the
case.
As
in
the
documents
relied
on
by
the
parties,
namely
Thorsteinson
(para.
4.02(2)),
the
reference
is
to
"gift"
and
"debt
release",
the
question
arises
whether
a
gift
is
a
transfer
and
also
whether
a
debt
release
is
a
transfer.
4.06.3
Whether
gift
a
transfer
In
Fisher
(para.
4.02(11),
supra,
at
para.
4.04.2(2)),
referring
to
the
Random
House
Dictionary
of
the
English
Language,
there
is
no
doubt
that
a
gift
("gift,
or
otherwise,
of
real
or
personal
property,
to
another")
is
a
transfer.
And
as
in
subsection
160(1),
the
wording
is
“transferred
property",
and
the
word
"property"
in
subsection
248(1)
of
the
Act
means
inter
alia
“a
right
of
any
kind
whatever"
(para.
4.01),
a
gift
of
a
sum
of
money
or
a
house
certainly
constitutes
a
transfer.
However,
there
is
another
problem,
namely
whether
Exhibit
A-1(D),
cited
in
para.
3.02.3,
is
really
a
gift.
The
fact
that
it
is
called
a
gift
does
not
mean
that
it
is
a
gift.
“It
is
not
what
the
act
is
called,
but
its
substance
and
effects
that
determine
its
nature"
(Hervé
Roch,
Traité
de
droit
civil
du
Québec,
Vol.
5,
p.
16
in
comments
on
Art.
755
of
the
Civil
Code.)
One
condition
required
by
Art.
755
of
the
Civil
Code
for
a
gift
to
exist
and
to
be
effective
is
its
acceptance
by
the
donee.
Article
755
reads
as
follows:
A
gift
inter
vivos
is
an
act
by
which
the
donor
divests
himself,
by
gratuitous
title,
of
the
ownership
of
a
thing,
in
favour
of
the
donee,
whose
acceptance
is
requisite
and
renders
the
contract
perfect.
This
acceptance
makes
it
irrevocable,
saving
the
cases
provided
for
by
law,
or
a
valid
resolutive
condition.
In
the
gift
(Exhibit
A-1(D))
mentioned
above
(para.
3.02.3),
the
donee,
the
appellant,
accepted
the
gift.
In
this
regard,
in
Exhibit
A-1(B),
that
is
the
document
of
September
30,
1979
(para.
3.02.1),
and
in
Exhibit
A-1(C),
the
document
of
June
18,
1980
(para.
3.02.2),
it
appears
from
the
wording
that
no
written
acceptance
was
given
by
the
appellant.
These
two
documents
cannot
be
regarded
as
deeds
of
gift.
It
cannot
be
doubted
that
in
substance
Exhibit
A-1(D)
is
a
debt
release;
but
is
it
a
gift?
4.06.4
Whether
debt
release
a
gift
There
are
two
aspects
to
any
gift:
a
material
aspect
involving
the
actual
impoverishment
of
the
donor
on
the
one
hand
and
enrichment
of
the
donee
on
the
other,
and
the
aspect
of
intent
which
is
also
known
as
the
animus
donandi.
As
regards
the
aspect
of
intent
or
animus
donandi,
there
is
no
doubt
that
this
aspect
was
present
in
the
deed
of
gift
of
December
21,
1983.
The
gift
was
subject
to
no
condition
or
limitation.
In
no
way
is
there
any
reason
to
apply
the
fundamental
principle
of
gift
that
giving
and
at
the
same
time
retaining
is
not
a
valid
gift.
However,
this
cannot
be
said
of
the
documents
of
September
30,
1979
(Exhibit
A-1(B),
para.
3.02.1)
and
June
18,
1980
(Exhibit
A-1(C),
para.
3.02.2),
in
which
various
conditions
or
limitations
are
imposed
on
the
donee.
Turning
to
the
material
aspect,
the
impoverishment
of
one
and
enrichment
of
the
other,
does
this
exist
in
a
debt
release?
The
liabilities
of
the
appellant's
balance
sheet
at
December
31,1982
show
an
account
payable
of
$226,388
to
Marie
Basque.
No
balance
sheet
of
Marie
Basque
at
December
31,
1982
was
filed
as
an
exhibit
at
the
hearing.
One
does
not
have
to
be
an
accounting
specialist
to
know
that
on
that
date
Marie
Basque
had
an
account
receivable
from
the
appellant
of
$226,388.
The
fact
that
it
was
not
in
writing
in
a
financial
statement
called
a
“balance
sheet"
and
entered
in
evidence
does
not
signify.
By
waiving
this
account
receivable
of
$226,388,
Marie
Basque
reduced
her
funds
by
that
amount
and
diminished
the
equity
on
the
assets
of
her
balance
sheet.
The
appellant,
on
the
other
hand,
by
eliminating
his
account
payable
of
$226,388
from
the
liabilities
of
his
balance
sheet,
increased
his
equity
in
the
assets
of
his
balance
sheet
by
that
amount.
In
my
opinion
the
two
aspects
of
the
gift
are
met
in
the
deed
of
gift
of
December
21,
1983.
Commenting
on
Art.
1181
of
the
Civil
Code,
which
deals
with
the
release
of
an
obligation,
Léon
Faribaul
(Traité
de
droit
civil
du
Québec,
Vol.
8
bis,
p.
546,
para.
715),
after
giving
the
definitions
of
various
writers,
concluded
as
follows:
From
all
these
definitions
it
must
be
concluded
that
release
is
a
waiver
which
the
creditor
makes
of
his
rights,
without
receiving
anything
in
return.
By
giving
a
release,
the
creditor
is
making
a
gift.
4.06.5
Whether
debt
release
a
transfer
Additionally,
in
view
of
the
wide
meaning
that
must
be
given
to
the
word
"transferred",
the
impoverishment
of
the
donor
and
the
enrichment
of
the
donee
clearly
indicate
through
the
balance
sheet
that
there
actually
was
a
transfer
of
property.
Another
argument
in
favour
of
the
conclusion
that
a
debt
release
is
a
transfer
of
property
is
the
existence
of
words
which
to
some
extent
extend
the
meaning
of
the
word
"transferred"
in
subsection
160(1):
Where
a
person
has
.
.
.
transferred
property,
either
directly
or
indirectly,
by
means
of
a
trust
or
by
any
other
means
.
.
.
Even
if
the
legislator
had
used
the
words
“dispose
of"
as
counsel
for
the
appellant
suggested
(para.
4.03.3(1)),
I
strongly
doubt
whether
this
would
have
given
a
wider
meaning
than
that
given
in
the
introductory
part
of
subsection
160(1)
supra
(para.
4.01).
4.06.6
Whether
appellant
assessed
in
correct
year
On
this
point
the
Court
agrees
with
the
arguments
of
counsel
for
the
respondent
set
out
above
in
para.
4.04.3.
Essentially,
in
cases
where
section
160
is
applied,
what
is
at
issue
is
not
income
or
taxable
income
for
the
spouse
to
whom
the
transfer
in
question
is
made,
it
is
the
tax
owed
by
the
maker
of
the
transfer
whose
spouse
becomes
jointly
liable.
Subsection
160(2)
makes
no
mention
of
a
taxation
year.
Only
subparagraph
160(1)(3)(ii)
refers
to
this,
but
to
specify
the
amount
of
tax
owed
by
the
transferor
of
property
”.
.
.
in
respect
of
the
taxation
year
in
which
the
property
was
transferred
or
of
any
preceding
taxation
year".
In
subsection
160(2),
the
legislator
is
very
careful
to
say
the
following:
The
Minister
may
at
any
time
assess
a
transferee
.
.
.
4.06.7
The
Court
must
therefore
uphold
the
notice
of
assessment
issued
by
the
respondent
on
January
22,
1985.
5.Conclusion
For
the
foregoing
reasons
for
judgment,
the
appeal
is
dismissed.
Appeal
dismissed.
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