The Ontario Court of Appeal has dismissed the Crown's appeal
in Fairmont Hotels Inc. v. A.G. (Canada)
(2015 ONCA 441).
In Fairmont (2014 ONSC 7302), the taxpayer was successful
on an application for rectification of certain corporate
transactions (see our previous post
here).
On appeal, the Crown argued that the lower court had misapplied
the test for rectification because the parties had not determined
the specific manner in which their intention to avoid tax would be
carried out. In the Crown's view, the lower court's
judgment sanctioned retroactive tax planning.
The Court of Appeal disagreed:
[8] In these circumstances, relying on this court's decision
in Juliar, the application judge held that the respondent was
entitled to rectify the relevant corporate resolutions to correct
the mistaken share redemptions. This result, the application judge
noted, would avoid the imposition of an unintended tax burden that
the respondent had sought to avoid from the
