When tax trouble arises, some property owners consider transferring assets to relatives to reduce exposure. A recent Tax Court of Canada decision shows why that strategy can backfire — and potentially expand liability instead of limiting it.
In Gill v. The King, 2026 TCC 18, a taxpayer facing a large income-tax assessment transferred 99% of his interest in the family home to his spouse and son for nominal payment. The result: CRA assessed the recipients personally for the unpaid tax.
Here are three key takeaways homeowners should understand:
- Transferring property below market value can shift tax liability to the recipient
Canadian tax law allows CRA to pursue related persons who receive property from a tax debtor for less than fair market value. The court confirmed that where property is transferred to a spouse or child for nominal consideration, exposure can follow the asset.
Why this matters:
Putting real estate into a family member’s name does not automatically insulate it from tax collection risk. In some cases, it simply transfers the risk along with it.
- Intent and awareness usually do not matter
In Gill, the recipients argued they did not know about the tax debt and had contributed financially to the home in the past. The court was not persuaded, emphasizing that liability under subsection 160 focuses primarily on the transfer itself and the value exchanged.
Why this matters:
Even innocent transfers can trigger liability if fair market value is not paid and documented.
- Undoing the transfer later may not undo the exposure
One recipient later gave up their interest in the property, but the court confirmed that this did not eliminate the liability created at the time of the original transfer.
Why this matters:
Once triggered, this type of statutory liability can persist even if ownership changes again afterward.
The broader lesson:
Real estate transfers between family members should always be approached carefully — particularly if tax issues exist or may arise. Steps taken after a tax assessment can sometimes create additional legal exposure rather than reducing it.
Dig deeper:
Trial Lawyers Association summary:
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Gill v. The King, 2026 TCC 18 :
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Income Tax Act — subsection 160(1):
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Excise Tax Act — section 325:
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As always, if you or a client are considering a transfer of real estate and want to understand the potential legal or title implications, we’re happy to help you assess the situation before steps are taken.