Jamie Golombek: A recent tax case deemed a wife liable for the tax debt of her husband under the joint liability rule
Under the joint liability rule (Section 160 of the Income Tax Act), the CRA can hold a spouse liable for their partner's tax debt if certain criteria are met: a transfer of property occurred between non-arm's length individuals (typically spouses), without adequate consideration, while the transferor had an outstanding tax liability. A recent case highlights this, where a wife was deemed liable for her husband's tax debt because she received funds from him, which she claimed were loan repayments but lacked sufficient documentation to prove it.
