How far back can CRA go to apply section 160 liability against a shareholder?

Section 160 assessments aren't confined by the ordinary reassessment period that applies to a regular reassessment of the original taxpayer's own return, because assessing a recipient under section 160 is a distinct exercise, it assesses the recipient's own derivative liability for someone else's tax debt, not the transferor's return for a particular year. As a result, CRA can generally pursue a section 160 assessment well beyond the timeframe that would otherwise apply to reassessing the person who originally owed the tax.

This means the simple passage of time since an under-value transfer happened doesn't, by itself, provide the kind of protection a recipient might expect if they were thinking in terms of ordinary reassessment periods. A transfer that took place years earlier can still expose the recipient to a section 160 assessment today, provided the underlying tax debt and under-value transfer are established.

Because this is one of the more counterintuitive aspects of section 160 for people who assume old transactions are automatically safe once enough time has passed, anyone who has ever received property or payments from a corporation or family member they don't deal with at arm's length, for less than full value, should understand that time alone isn't a reliable defence, and should get advice specific to their situation.