Transfer of legal title alone, without beneficial ownership, was found sufficient to constitute a “transfer of property” under section 160 in Gill v. The King (2026 TCC 18; under appeal). This decision creates practical challenges for valuation, estate planning and risk management in non-arm’s-length arrangements.
Section 160 creates joint and several liability between the transferor and transferee for the transferor’s outstanding tax debts where property is transferred for less than FMV to a non-arm’s-length person. However, it is unclear how section 160 applies when ownership is bifurcated between beneficial ownership and legal title. Beneficial ownership carries the economic value of the property, including rights to income or proceeds from sale. Conversely, legal title reflects formal ownership and may confer no economic benefit.
The appellants, Japseet Kaur Gill and Harman Singh Gill, were assessed by the minister under section 160 for the underlying tax liability of Maninder Gill, Japseet’s husband and Harman’s father. Maninder was the sole registered owner of the family home. In March 2009, the CRA reassessed Maninder’s 2004 and 2005 taxation years, resulting in an outstanding tax liability in excess of $1 million. On June 3, 2010, Maninder transferred a 59 percent interest in the family home to his wife, Japseet, and a 40 percent interest to his son, Harman. The CRA alleged that both provided $1 in consideration. In 2016, both Maninder and Harman transferred their interests in the family home to Japseet, making her the sole registered owner. The family continued to reside in the home and therefore there was no change in use.
At appeal, the TCC held that although the transferees acquired only legal title with no beneficial interest, the criteria of section 160 had been met. The TCC relied on paragraph 22 of Canada v. Livingston (2008 FCA 89), which suggested that the transfer of the legal title alone could suffice. The TCC also noted that, for the purposes of the section 160 assessments, it accepted the CRA’s determination of the FMV of the property and allocated that value on a prorated basis to the interests transferred. The TCC did not address the issue of the calculation of the section 160 liability when only bare legal title is conveyed. The court also noted that the subsequent disposition of the property by the son to his mother did not relieve him of liability under subsection 160(1), underscoring the potential breadth of the provision.
In Gill, the TCC relied on the obiter comments of the FCA in Livingston about the transfer of legal title for the purpose of section 160. This raises questions about whether these comments are binding. Obiter dicta comments are judges’ incidental expressions of opinion and are not essential to the decision. While they do not establish a binding precedent, they may carry persuasive weight, particularly when articulated by appellate courts. In Goldman v. The Queen (2021 TCC 13), Graham J observed that the comments in Livingston regarding legal and beneficial ownership should not be read as authority. He emphasized that legal title alone has no independent economic value, highlighting tension between nominal transfers and section 160’s FMV framework.
The decision in Gill also raises some questions about its practical implications, particularly around valuations for tax and the risk of overinclusive assessments under section 160. Although section 160 limits liability to the FMV of the property transferred less any consideration, it is unclear what value attaches to legal title without beneficial interest. In practice—especially in real estate, where registered title is often treated as the primary indicator of ownership—the CRA may default to assessing the full property value, exposing individuals who receive no economic benefit to significant liability. This risk is particularly pronounced in non-arm’s-length arrangements where legal and beneficial ownership are not clearly distinguished.
Gill may affect estate and probate planning as well. Planning that includes adding children to title or using bare trusts has traditionally relied on the distinction between legal and beneficial ownership. However, given that this planning often involves non-arm’s-length parties who pay little or no consideration, it satisfies key elements of section 160. Such arrangements could expose beneficiaries to the transferor’s tax liabilities.
Practitioners can reduce this risk through thorough documentation and structuring, such as formalizing bare trusts and recording retention of beneficial ownership. This may help with the valuation process, but it is unclear how the courts will contend with valuing legal ownership and beneficial ownership separately.
The absence of a limitation period to make initial section 160 assessments allows the CRA to review historical transfers, especially in circumstances where documentation or other evidence to prove beneficial ownership is difficult to locate.
