From David Nathanson, “Tax Liens and Constructive Trusts” 26:8 Canadian Tax Highlights (Aug 2018):
Thus, if a constructive trust is recognized, for income tax purposes the legal owner of the property in dispute is generally regarded by the CRA as having disposed of it at FMv when the court so orders in favour of the property’s rightful owner.
Unless the OCA decision in Trang v Nguyen [2012 ONCA 885] is overruled by the SCC, the interest of an aggrieved spouse claiming and establishing a constructive trust in property, legal title to which is held by the other spouse, appears to rank ahead of a lien registered by the CRA against the latter spouse’s property when the constructive trust came into existence and not when the constructive trust’s existence is recognized in the court’s judgment.
But, given the latter principle (that the constructive trust is not created by the court declaration but as the contribution is made that is the subject of the trust)
…then the administrative pronouncement in the document [CRA technical interpretation 9812527 (October 21, 1998)] quoted above is wrong: a constructive trust established by a
judicial determination does have retroactive effect. The legal owner of the property in dispute is generally viewed as having disposed of the property at FMV when the right of action arose, and that may be in a year for which the normal reassessment period has expired.