Can CRA pursue a spouse?

I am an undischarged bankrupt and I owe Canada Revenue Agency (“CRA”) a lot of taxes.  My Trustee has reached an agreement with CRA and given me an amount that will get me discharged. CRA has issued an assessment against my wife regarding the transfer of my share of the ownership of our home to her.  They have made this assessment under S160 of the Income Tax Act.  If I get discharged does CRA still have the right to pursue my wife?

Yes.

If CRA has raised a Section 160 assessment against your wife then it is something she is going to have to deal with.  It is sometimes referred to as a memo assessment as the debt relates to any taxes owing by the bankrupt and subsequently also assessed against the recipient of the property.  Despite your bankruptcy and your discharge, it does not absolve her of this assessment. Any funds that CRA receives from your Trustee in bankruptcy would go to reduce the assessment against your wife.

Your wife should either talk to CRA directly to deal with this matter, obtain independent legal advice to see what her rights are or speak to a Trustee.

Ask a Trustee

If you have something you’d like to Ask a Trustee, use this form to submit your question.

And follow @askatrustee on Twitter