Sobier
J.T.C.C.:
—
These
appeals
were
heard
on
common
evidence
in
accordance
with
the
Order
of
Mogan
J.T.C.C.,
dated
May
6,
1996.
The
Appellants
appeal
from
the
assessments
by
the
Minister
of
National
Revenue
(the
“Minister”)
under
subsection
160(1)
of
the
Income
Tax
Act
(the
“Act”)
in
respect
of
transfers
of
properties
from
Steven
Zobay
to
his
spouse,
the
Appellant
Roswitha
Maria
Zobay
and
to
the
Appellant
913229
Ontario
Inc.
(“913229”),
a
corporation
wholly
owned
by
his
spouse
at
a
time
when
Mr.
Zobay
was
liable
to
pay
tax
under
the
Act.
All
four
parcels
of
land
in
question
were
originally
transferred
to
Mrs.
Zobay.
I
will
refer
to
them
as
parcels
1,
2,
3
and
4.
Mrs.
Zobay
retained
parcels
1
and
2
and
transferred
parcels
3
and
4
to
913229.
Mrs.
Zobay
was
assessed
with
respect
to
the
transfer
to
her
of
all
four
parcels
and
913229
was
assessed
as
to
parcels
3
and
4
only.
Subsection
160(1)
reads
as
follows:
Section
160:
Tax
liability
re
property
transferred
not
at
arm's
length
(1)
Where
a
person
has,
on
or
after
May
1,
1951,
transferred
property,
either
directly
or
indirectly,
by
means
of
a
trust
or
by
any
other
means
whatever,
to
(a)
the
person’s
spouse
or
a
person
who
has
since
become
the
person’s
spouse,
(b)
a
person
who
was
under
18
years
of
age,
or
(c)
a
person
with
whom
the
person
was
not
dealing
at
arm’s
length,
the
following
rules
apply:
(d)
the
transferee
and
transferor
are
jointly
and
severally
liable
to
pay
a
part
of
the
transferor’s
tax
under
this
Part
for
each
taxation
year
equal
to
the
amount
by
which
the
tax
for
the
year
is
greater
than
it
would
have
been
if
it
were
not
for
the
operation
of
sections
74.1
to
75.1
of
this
Act
and
section
74
of
the
Income
Tax
Act,
chapter
148
of
the
Revised
Statutes
of
Canada,
1952,
in
respect
of
any
income
from,
or
gain
from
the
disposition
of,
the
property
so
transferred
or
property
substituted
therefor,
and
(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
total
of
all
amounts
each
of
which
is
an
amount
that
the
transferor
is
liable
to
pay
under
this
Act
in
or
in
respect
of
the
taxation
year
in
which
the
property
was
transferred
or
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
Acct.
Having
transferred
parcels
3
and
4
to
913229,
has
Mrs.
Zobay
escaped
liability
under
subsection
160(1)
by
reason
of
the
assessment
of
tax
against
her
under
subsection
160(1)
being
made
after
she
was
no
longer
the
registered
owner
of
parcels
3
and
4?
The
answer
to
this
question
is
no.
Her
joint
and
several
liability
under
subsection
160(1)
arose
at
the
time
of
the
transfer
of
all
four
parcels
to
her.
That
she
later
transferred
parcels
3
and
4
is
of
no
consequence.
Having
found
that
Mrs.
Zobay
is
liable
with
respect
to
the
transfer
of
the
four
parcels,
does
this
have
any
effect
on
the
transfer
of
parcels
3
and
4
to
913229?
The
answer
to
this
question
is
also
no.
Mrs.
Zobay’s
liability
is
qua
spouse
for
the
direct
transfers
of
property
to
her.
The
liability
of
913229
arises
upon
the
indirect
transfer
by
Mr.
Zobay
via
Mrs.
Zobay
of
parcels
3
and
4
and
this
liability
is
qua
a
person
with
whom
Mr.
Zobay
was
not
dealing
at
arm’s
length.
Mr.
Zobay
does
not
deal
with
his
wife
at
arm’s
length
because
they
are
related
persons
by
reason
of
marriage
and
Mr.
Zobay
is
not
dealing
at
arm’s
length
with
913229
because
they
are
related
persons
since
913229
is
a
corporation
controlled
by
Mrs.
Zobay.
Accordingly,
the
assessments
made
against
both
Appellants
are
valid.
At
the
hearing
of
the
appeal
and
in
the
Notice
of
Appeal,
Mr.
Zobay
admitted
making
the
transfers
of
the
four
parcels
and
that
in
the
case
of
parcels
3
and
4,
the
Notice
of
Appeal
admits
the
transfers
by
Mrs.
Zobay
to
913229.
Mr.
Zobay
stated
that
the
reason
for
the
transfers
was
that
because
he
no
longer
could
afford
to
pay
the
costs
of
maintaining
his
interest
in
the
properties.
This
does
not
permit
the
Appellants
to
escape
liability
under
subsection
160(1).
In
addition,
no
evidence
was
led
to
establish
the
value
of
the
properties
at
the
time
of
the
transfers
in
order
to
show
that
he
received
adequate
consideration
for
the
transfers.
The
Appellants
having
failed
to
discharge
the
onus
placed
upon
them,
the
appeals
are
dismissed.
I
make
no
order
as
to
costs.
Appeal
dismissd.
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