What is section 160 liability if my corporation transfers property to me for less than it's worth?

Section 160 of the Income Tax Act makes a person who receives property from someone they don't deal with at arm's length, for less than the property's fair market value, personally liable for the transferor's unpaid tax debts, up to the amount of the shortfall between what was actually paid and what the property was really worth, provided the transferor owed tax for the year of the transfer or an earlier year.

The most common scenario in a corporate context is a corporation transferring property to a shareholder, or a similar non-arm's-length transfer within a family, for less than full value while the transferor has an outstanding tax debt at the time. The rule doesn't require any intent to avoid tax, it applies based on the objective fact of an under-value transfer between non-arm's-length parties combined with the transferor's existing tax debt, regardless of why the transfer happened.

Because the liability attaches to the recipient personally, not just to the corporation or person who originally owed the tax, anyone receiving property from a corporation or family member they don't deal with at arm's length should confirm the transferor's tax standing and ensure the transfer reflects genuine fair market value, rather than assuming a below-value transfer carries no personal risk.