Crown claims man used $500,000 to buy wife's home while owing $30,000 in taxes
The Tax Court of Canada has dismissed a woman’s appeal of a derivative assessment of $30,000 for her husband’s debt under the Income Tax Act, 1985, because it determined that he gave her the funds to purchase her house.
In Ballantyne v. The King, 2025 TCC 127, the minister of national revenue issued the appellant a derivative assessment for almost $30,000 in June 2019 under s. 160(1) of the Income Tax Act, 1985.
The Crown alleged that the appellant’s husband owed debt in that amount under the Income Tax Act for his 2007, 2008, 2009, 2010, and 2012 tax years.
According to the Crown, the appellant’s husband shelled out almost $500,000 for her to purchase her residence on Salt Spring Island, BC, when his income tax debt was nearly $30,000.
The appellant appealed the derivative assessment.
Assessment affirmed
The Tax Court of Canada dismissed the appeal without costs. First, on a balance of probabilities, the court determined that the husband provided all the funds to purchase the appellant’s residence in June 2012.
The appellant testified that her husband received his inheritance from overseas in 2005, while she got hers in 2009. She said she intended to transfer her inheritance funds, which she had not touched except for investment purposes, to her daughter from a previous marriage.
According to the appellant’s testimony, her husband used his inheritance to buy her house on Salt Spring Island. She and her husband agreed that she could live in the home, to which she had legal title, until she died, at which point her husband’s two sons from a prior marriage would get it.
Second, the appellant challenged a box chart in the assessment, which provided the minister’s computation of the husband’s debt under the Income Tax Act, as a “mess.”
As a witness to support the appellant’s argument, the husband provided an August 2021 statement of account from the Canada Revenue Agency. He alleged false accounting, bias, and a dishonest, partial, corrupt, or oppressive purpose on the minister’s part.
The court found the husband’s evidence vague, incoherent, contradictory, and insufficient to meet the standard of reliability to establish the minister’s incorrect assessment of the debt amount.
The court noted that the husband assailed assessments for tax years not relevant to the minister’s assumptions regarding his debt, including his 2003 tax year assessment, and offered his own incomprehensible computations.
