Underused Housing Tax Act

Marginal note:Definition of transaction

• 80 (0.1) In this section, transaction includes an arrangement or event.

• Marginal note:Tax liability — transfers not at arm’s length

  (1) If at any time a person transfers property, either directly or indirectly, by means of a trust or by any other means, to

  • (a) the transferor’s spouse or common-law partner or an individual that has since become the transferor’s spouse or common-law partner,

  • (b) an individual that was under 18 years of age, or

  • (c) another person with whom the transferor was not dealing at arm’s length,

  the transferee and transferor are jointly and severally, or solidarily, liable to pay under this Act an amount equal to the lesser of

  • (d) the amount determined by the formula

    A – B

    where

    A

    is the amount, if any, by which the fair market value of the property at that time exceeds the fair market value at that time of the consideration given by the transferee for the transfer of the property, and

    B

    is the amount, if any, by which the amount assessed the transferee under subsection 325(2) of the Excise Tax Act, paragraph 97.44(1)(b) of the Customs Act, subsection 160(2) of the Income Tax Act, subsection 297(3) of the Excise Act, 2001 or subsection 161(3) of the Greenhouse Gas Pollution Pricing Act in respect of the property exceeds the amount paid by the transferor in respect of the amount so assessed, and

  • (e) the total of all amounts each of which is

    • (i) an amount that the transferor is liable to pay under this Act for the calendar year of the transferor that includes that time or any preceding calendar year of the transferor, or

    • (ii) interest or penalty for which the transferor is liable as of that time,

  but nothing in this subsection limits the liability of the transferor under this Act.

• Marginal note:Fair market value of undivided interest

  (2) For the purpose of this section, the fair market value at any time of an undivided interest in a property, expressed as a proportionate interest in that property, is, subject to subsection (5), deemed to be equal to the same proportion of the fair market value of that property at that time.

• Marginal note:Assessment

  (3) The Minister may at any time assess a transferee in respect of any amount payable by reason of this section, and the provisions of sections 15 and 33 to 46 apply, with any modifications that the circumstances require.

• Marginal note:Rules applicable

  (4) If a transferor and transferee have, by reason of subsection (1), become jointly and severally, or solidarily, liable in respect of part or all of the liability of the transferor under this Act, the following rules apply:

  • (a) a payment by the transferee on account of the transferee’s liability must, to the extent of the payment, discharge their liability; and

  • (b) a payment by the transferor on account of the transferor’s liability only discharges the transferee’s liability to the extent that the payment operates to reduce the transferor’s liability to an amount less than the amount in respect of which the transferee was, by subsection (1), made jointly and severally, or solidarily, liable.

• Marginal note:Transfers to spouse or common-law partner

  (5) Despite subsection (1), if at any time an individual transfers property to the individual’s spouse or common-law partner under a decree, order or judgment of a competent tribunal or under a written separation agreement and, at that time, the individual and the individual’s spouse or common-law partner were separated and living apart as a result of the breakdown of their marriage or common-law partnership as defined in subsection 248(1) of the Income Tax Act, for the purposes of paragraph (1)(d), the fair market value at that time of the property so transferred is deemed to be nil, but nothing in this subsection limits the liability of the individual under this Act.

• Marginal note:Anti-avoidance rules

  (6) For the purposes of this section, if a person transfers property to another person as part of a transaction or series of transactions, the following rules apply:

  • (a) the transferor is deemed to not be dealing at arm’s length with the transferee at the time of the transfer of the property if

    • (i) the transferor and the transferee do not deal at arm’s length at any time during the period beginning immediately prior to the transaction or series of transactions and ending immediately after the transaction or series of transactions, and

    • (ii) it is reasonable to conclude that one of the purposes of undertaking or arranging the transaction or series of transactions is to avoid joint and several, or solidary, liability of the transferee and the transferor under this section for an amount payable under this Act;

  • (b) an amount that the transferor is liable to pay under this Act (including, for greater certainty, an amount that the transferor is liable to pay under this section, regardless of whether the Minister has made an assessment under subsection (3) in respect of that amount) is deemed to have become payable in the calendar year of the transferor in which the property was transferred, if it is reasonable to conclude that one of the purposes of the transfer of the property is to avoid the payment of a future amount payable under this Act by the transferor or transferee; and

  • (c) the amount determined for A in paragraph (1)‍(d) is deemed to be the greater of

    • (i) the amount otherwise determined for A in paragraph (1)‍(d) without reference to this paragraph, and

    • (ii) the amount determined by the formula

      A − B

      where

      A

      is the fair market value of the property at the time of the transfer, and

      B

      is the fair market value, at its lowest at any time during the period beginning immediately prior to the transaction or series of transactions and ending immediately after the transaction or series of transactions, of the consideration given by the transferee for the transfer of the property (other than any part of the consideration that is in a form that is cancelled or extinguished during that period and for which no property that is neither cancelled nor extinguished during that period is substituted) provided that the consideration is held by the transferor at that time.