ARTICLE · 15 DECEMBER 2016

Fairmont: SCC Revises Common Law Test For Tax Rectifications

Dentons Canada LLP

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In a 7-2 decision in AG (Canada) v. Fairmont Hotels Inc, the Supreme Court of Canada has modified the common law test for rectification where the taxpayer has suffered an unintended and adverse tax result...

CanadaTax

Timothy Fitzsimmons

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In a 7-2 decision in AG (Canada) v. Fairmont Hotels Inc. (2016 SCC 56), the Supreme Court of Canada has modified the common law test for rectification where the taxpayer has suffered an unintended and adverse tax result. The Court also clarified the standard of proof in respect of evidence of the parties' intent on a rectification application.

A general intent to avoid or minimize tax is no longer sufficient to support an application for rectification.

In the companion case of Jean Coutu Group (PJC) Inc. v. AG (Canada), the Supreme Court reached a similar conclusion regarding tax intent and the modification of documents under the Quebec Civil Code (we shall follow-up with another post on this decision).

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