Section 160 and Section 325 Assessments

Section 160 of the Income Tax Act and Section 325 of the Excise Tax Act are two sides of the same coin. These provisions allow the CRA to collect a taxpayer’s debt from someone else if that person received property or money from the taxpayer for little or no value. A Toronto tax lawyer at Kirshen Tax Law can help you respond to these aggressive assessments and protect your legal rights.

If you’ve received a gift or transfer from someone who owes taxes, the CRA may come after you, even if you had nothing to do with the tax problem.

How It Works

If a taxpayer has a tax debt (or would have had a tax debt if they had filed or been assessed), and they give away property or money, the CRA can issue an assessment against the person who received it, up to the value of what was transferred.

Here’s an example:

Tom owes the CRA $500,000. He transfers $250,000 to his father in an attempt to keep it away from CRA collections. A year later, Tom declares bankruptcy, wiping out his CRA debt.

The CRA reviews Tom’s bank records and sees the $250,000 transfer. They issue a letter to Tom’s father threatening an assessment under Section 160. Tom’s father is then assessed for $250,000, the value he received. He can’t be assessed for the full $500,000 because that’s more than what was transferred.

Now CRA collections will pursue Tom’s father for the $250,000 even though he didn’t cause or benefit from the original debt.

If Tom’s debt was for GST/HST or payroll deductions, the CRA would use Section 325 instead.

What Triggers a Section 160 or 325 Assessment?

These assessments can apply to:

• Cash transfers between family members;
• Gifting vehicles, real estate, or business assets;
• Joint bank accounts or shared title to property; and

• Any transfer where the CRA believes less than fair market value was paid.

Why Work with Kirshen Tax Law?

If you’ve received a letter threatening an assessment under Section 160 or Section 325, we can help:

• Review the facts and determine if the CRA is entitled to issue the assessment. As Toronto tax lawyers, we understand how the CRA builds these cases and how to challenge their legal assumptions.
• Identify possible defences and reduce the exposure.
• Respond to pre-assessment letters before they’re finalized.

• Negotiate with CRA collections or file a formal objection.

These assessments can feel unfair especially when you didn’t create the original tax problem. We work to ensure you’re only held responsible for what’s legally required if anything.

Proven Results: Section 160 / 325 Assessments

We’ve helped clients successfully defend against Section 160 and 325 assessments, both at the pre-assessment stage and after assessments were issued. In many cases, we’ve reduced or eliminated the assessed amount by showing the transfers were made for fair market value, did not fall within the applicable time limits, or were exempt due to other legal arguments.

See examples of our Section 160/325 assessment results here.

Book a Free Consultation

If you’ve been threatened with a Section 160 or 325 assessment, contact us today for a free consultation. You’ll speak directly with an experienced Toronto tax lawyer who can assess your exposure, explain your options, and help protect your assets.