In this case, Justice Paul Bedard, a careful and clever judge, made an odd comment in his short, 4-page reasons. He said:
"The appellants, on the other hand, failed to satisfy me that the Corporation did not receive notices of the assessments listed in Schedule A to the Reply to the Notice of Appeal." [Para. 9]
Despite what Bedard J. said, you should not count on using lack of notice as protection from liability. The CRA need not show that it assessed the person who owes taxes. Showing an assessment does help the CRA prove that the taxes were owing but the CRA has the right, in tax cases, simply to assume that taxes were owing. Even so, the CRA certainly has no obligation to show that the tax debtor got notices of the tax assessments. The CRA need only show that taxes were owing, not that the tax debtor or the third party, the transferee, knew that taxes were owing.
(These non-arm's length transfer rules allow CRA to assess the transferee at any time. There is no limitation period. And the tax courts have said the rules make a transferee liable even if the CRA could no longer assess the transferor. For example, if the tax debtor became a bankrupt after the transfer, CRA could still assess the non-arm's length transferee, though it could not assess or collect from the transferor. See Wannan v. Canada, 2003 FCA 423 (CanLII) at paras. 12 and 22.)
So, if your spouse pays your bills or gives you money, you could be liable for his or her taxes, even if you don't know that she owes taxes when you take the gift.
This was a GST case. Under the GST law, the corporation was liable to remit taxes each quarter, whether or not CRA assessed the corporation. If CRA said the corporation owed taxes, that was enough for the shareholders to be liable themselves for the taxes, once they took money from the corporation as a dividend distribution. To escape liability, the shareholders had to show that either (a) the corporation didn't owe GST or (b) they gave fair value (such as loans) for what they got from the corporation. The shareholders couldn't show either.
See Alimoradi v. The Queen, 2013 TCC