The appellant in Veilleux c R, 2022 CCI 69, was one of two unrelated individuals who were the 50/50 shareholders and only directors of Opco. The CRA assessed the appellant under section 160 for Opco’s unpaid tax debts in respect of dividends he received from the corporation. Did the appellant deal not at arm’s length with Opco as a matter of fact so that section 160 applied to the dividends? The court held that the appellant did not deal at arm’s length with Opco as a matter of fact because he acted in concert with the unrelated director to declare dividends on the advice of Opco’s accountant. The accountant had advised the shareholders that they should receive more dividends and less salary. The appellant and the other shareholder-director cooperated to follow this advice.
To similar effect, see HLB Smith Holdings Limited v R, 2018 TCC 83, which is discussed here.
