Can the Minister assess a taxpayer under section 160 in respect of an amount already included in the taxpayer’s income under subsection 15(1)? From Justice Bocock, in Parihar v R, 2015 TCC 52 at ¶45:
[A] shareholder who has been assessed under subsection 15(1) can also be assessed under subsection 160(1) given the different purposes of the two provisions. As this Court found in Bleau [2006 TCC 36, aff’d 2007 FCA 61], subsection 160(1) may be applicable to an amount transferred, notwithstanding that the same amounts may have already been taxed under the provisions of subsections 15(1) and (2).
It is unclear from Bleau whether the Court held that section 160 could apply to an amount included in a taxpayer’s income under subsection 15(2). Query whether section 160 could apply in such circumstances. If the Minister assessed the taxpayer under 15(2), it would seem to follow that the Minister accepted that the taxpayer borrowed funds from the corporate debtor. That is, it follows that the taxpayer provided consideration to the corporation in the form of a promise to repay the amount, which means that section 160 cannot apply to it.
Of course, that the taxpayer promised to repay the amount could create other problems: the debt obligation is an asset of the corporation that its creditors, including the Minister, can seek to realize.
