Fixing Tax Mistakes: Rectification Order Affirmed

On October 30, 2019 the British Columbia Court of Appeal ("BCCA") dismissed the appeal of the Attorney General and upheld the order of the Supreme Court of British Columbia ("BCSC") rectifying a directors' resolution declaring a dividend from the "capital dividend account" of a private corporation.¹ For additional background on the superior court decision under appeal, and other recent decisions involving rectification, please see the author's previous case comment.²

The Manitoba Ltd. decision is a welcome development in the law for taxpayers who may require equitable relief to fix unintended tax arising from mistakes. It was initially feared by advisors that the Supreme Court of Canada's landmark decision in Fairmont Hotels³ would eliminate rectification in the tax context.