Can my spouse be liable under section 160 if I transferred property to them and I owe CRA money?

Yes. Spouses are treated as non-arm's-length persons for section 160 purposes, so if you owe CRA money and transfer property to your spouse for less than its fair market value, your spouse can be personally assessed under section 160 for your unpaid tax debt, up to the value of the shortfall between what they gave you and what the property was actually worth. This applies regardless of whether the transfer was motivated by tax planning or was simply an ordinary gift or family arrangement.

This surprises a lot of people, since transfers between spouses often happen for entirely ordinary reasons, estate planning, simplifying joint finances, or just wanting to share an asset, without either spouse thinking of it as something that could create personal tax exposure. Section 160 doesn't require any intent to avoid tax on either side; the objective facts of the under-value transfer and the existing tax debt are what matter.

Because spousal transfers are common and often done informally, anyone who owes CRA money, or whose spouse does, should think carefully before transferring property between them for less than full value, and should confirm the other spouse's tax standing before accepting property that could carry this kind of exposure.