The Queen v. Sands Motor Hotel Ltd., 84 DTC 6464, [1984] CTC 612 (Sask QB) -- summary under Tax debt

It was held that under the Act, a debt of the taxpayer to the Crown comes into existence the moment that taxable income is earned, notwithstanding that assessment is not made by the Minister until considerably later. The taxpayer corporation accordingly was insolvent for purposes of section 40 of the Business Corporations Act (Saskatchewan) by virtue of paying dividends equal to all its remaining net assets, including proceeds of disposition of land which it had reported as a capital transaction, notwithstanding that the taxpayer was not reassessed on the basis that the disposition had been on capital account until after the payment of the dividends.