From time to time, the CRA will review transactions and impose a tax not contemplated when people make a deal. Usually the reason they do so is the failure to take into account a provision of the Tax Code which levies an unintended tax.
In some cases it is possible to obtain a court order to retroactively fix the transaction that caused the tax liability and thus solve the problem. The legal tool used for this is called the equitable doctrine of rectification.
Snell’s Equity describes this remedy as follows:
If by mistake a written instrument does not accord with the true agreement between the parties, equity has the power to reform, or rectify, that instrument so as to make it accord with the true agreement. What is rectified is not a mistake in the transaction itself, but a mistake in the way in which that transaction has been expressed in writing.
Courts of Equity do not rectify contracts; they may and do rectify instruments purporting to have been made in pursuance of the terms of the contract.
Rectification may be granted by the court if the taxpayers are able to show that the following factors were present:
Prior agreement
Common intention
The final document did not properly record the intention of the parties; and
Common or mutual mistake.
The CRA’s policy on rectification has been expressed as follows:
“Our general policy is that where the amendments are integral to achieving the original intention of the parties, the application for rectification will not be opposed.”
In other words, they will usually accept rectification when it is “merely” a means of implementing the original tax plan gone awry, but not if it is designed to retroactively create a tax plan not contemplated at the time the transaction was implemented.
The foregoing provides only an overview and does not constitute legal advice. You are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained in the context of your own particular circumstances.
From time to time, the CRA will review transactions and impose a tax not contemplated when people make a deal. Usually the reason they do so is the failure to take into account a provision of the Tax Code which levies an unintended tax.
In some cases it is possible to obtain a court order to retroactively fix the transaction that caused the tax liability and thus solve the problem. The legal tool used for this is called the equitable doctrine of rectification.
Snell’s Equity describes this remedy as follows:
If by mistake a written instrument does not accord with the true agreement between the parties, equity has the power to reform, or rectify, that instrument so as to make it accord with the true agreement. What is rectified is not a mistake in the transaction itself, but a mistake in the way in which that transaction has been expressed in writing.
Courts of Equity do not rectify contracts; they may and do rectify instruments purporting to have been made in pursuance of the terms of the contract.
Rectification may be granted by the court if the taxpayers are able to show that the following factors were present:
Prior agreement
Common intention
The final document did not properly record the intention of the parties; and
Common or mutual mistake.
The CRA’s policy on rectification has been expressed as follows:
“Our general policy is that where the amendments are integral to achieving the original intention of the parties, the application for rectification will not be opposed.”
In other words, they will usually accept rectification when it is “merely” a means of implementing the original tax plan gone awry, but not if it is designed to retroactively create a tax plan not contemplated at the time the transaction was implemented.
The foregoing provides only an overview and does not constitute legal advice. You are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained in the context of your own particular circumstances.
Tax Law
DioGuardi offers solutions for tax problems such as:
Unreported income
Unfiled tax returns
Payment arrangements
Unpayable tax debt
Tax dispute litigation
Criminal tax defense
Wills, Estates & Trusts
DioGuardi Law offers these will, estate and trust services for individuals and business-owners:
Wills
Preparation of trust agreements
Powers of attorney
Estate administration
Probate
Representation in estate driven litigation
Real Estate
DioGuardi Law can assist you with all your real estate needs including:
Newly constructed/Resale
Purchases and Sales
Title transfers
Leases
Private mortgages
Refinancing
Condominiums
Vacant land
Tax Debt Relief
When your tax balance is too large to be affordable, DioGuardi Law can protect your home, your cash flow and your financial assets from the Taxman. It is essential that we begin planning a strategy before the CRA registers a lien against your properties or seizes financial accounts, and before you engage with an insolvency trustee.
Business & Tax Planning
DioGuardi Law has the experience to provide:
Resident and non-resident corporate restructuring
Optimum use of holding corporations
Continuity and succession planning
Tax-free transfers
Losses and ABIL planning
Making interest tax deductible
Small business planning
Corporate & Commercial Law
DioGuardi Law have represented business clients for the last 50 plus years and have supported their legal requirements on an on-going basis by offering the following services:
Incorporations and corporate governance
Corporate reorganizations and transactions for the directors and shareholders
Negotiation and drafting of agreements, professional corporations, minute book maintenance
Brigitte DioGuardi
B.A., LL.B
Brigitte obtained her Law Degree from the University of Sheffield in the United Kingdom. Upon her return, she qualified for the Bar and was called to the Law Society of Ontario (formerly the Law Society of Upper Canada) in 2002. She was also a member of the Bar of British Columbia and headed up the Vancouver office of DioGuardi Tax Law. Fluently bilingual in English and French, Brigitte has broad experience in the areas of:
Joyce Bruno has worked as executive legal assistant to Paul Dioguardi for 35 years and continues to offer her expertise and experience to the Dioguardi Law firm. Joyce’s role has evolved over the years and has acquired and developed many skills. She is an invaluable asset in case management and ensures the smooth running of our office.
Paul DioGuardi
B.A., LL.B, KING’S COUNSEL, SENIOR COUNSEL
Paul obtained his Law Degree from Queen’s University in 1964. He is a member of the Bars of Ontario, British Columbia and the Turks and Caicos Islands, a British tax free territory in the West Indies. He has over 50 years of experience and was trained at the Ottawa head offices of Revenue Canada and the Tax Litigation Section at the Department of Justice. Paul has had and continues with an extensive career in various areas of law such as:
