INCOME TAX
Crown appealing Tax Court of Canada (T.C.C.) decisions allowing taxpayer’s appeal from reassessment under Income Tax Act, s. 160(1)—Under s. 160(1), if taxpayer transfers property to spouse or common‑law partner both jointly, severally liable to pay amounts transferor liable to pay under Act, to extent fair market value of property when transferred exceeds value at time consideration given for property— Taxpayer’s common‑law partner liable under Act for $500,000 —Minister assessed taxpayer as result of payments by partner on mortgage against house taxpayer owned—Before T.C.C., M.N.R. assumed partner transferred $61,878 to taxpayer, as had made all mortgage payments over five‑year period—Upon this appeal, Crown conceded claim should be reduced by $25,452, representing payout of prior mortgage from funds originating from new mortgage, not from partner—T.C.C. allowing appeal, finding taxpayer “gave more consideration than she got”—Appeals dismissed but for different reasons—Mortgage payments of about $500 monthly paid by partner but he resided at mortgaged premises—T.C.J. found rent for equivalent house was $1,200 to $1,500 per month— Reasonable inference: taxpayer gave partner use of house in consideration for mortgage payments—Amounts paid were well under fair market rental so could not be said “rent” partner paid as mortgage payments exceeded fair market value of consideration given by taxpayer—Thus, partner received consideration equivalent to or greater than amounts transferred to taxpayer—Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. 160(1) (as am. by S.C. 2000, c. 12, Sch. 2, s. 1).
Canada v. Ducharme (A‑346‑04, A‑435‑04, 2005 FCA 137, Rothstein J.A., judgment dated 29/4/05, 4 pp.)