Can a transaction be classed as a gift where there is a mortgage?

The transaction may still be classed a gift where there is a mortgage. With deference, I see no distinction in the case where a benefiting spouse is not a party to a mortgage made before the transfer, although that fact may be evidence the transaction is not a gift. The inclusion of mortgages and other encumbrances in s. l(i) in the definition is to ensure that the tax is payable on the "gross sale price" which would represent the value of the property. This is apparent when the latter part of the clause is read in the context. Mortgages and encumbrances are significant only when considered as part of the sale price. That was the result in City of Halifax v. Haggart. It is clear from the facts in this case that all the properties were conveyed as a gift. No consideration was in fact paid.