Rectification Application – Mandel: Canadian Tax Lawyer Analysis

Introduction - Ontario Superior Court of Justice rejects taxpayers' rectification application as attempt to engage in "retroactive tax planning"

The applicants, Mr. Mandel and Ms. Pike, were assessed by the Canada Revenue Agency (the "CRA") as having received shareholder benefits under subsection 15(1) of the Income Tax Act (the "Tax Act") amounting to approximately $15 million each in 2019. Mr. Mandel and Ms. Pike, and their families, each held approximately 25% in Welded Tube of Canada ("OpCo"), a successful steel pipe and tube manufacturer. In the 1990s, each applicant created a family trust, which held shares in a holding company ("HoldCo"), which in turn owned the applicants' shares in OpCo. In 2014, to defer significant tax liability that would have materialized from the deemed disposition of the trusts' assets after 21 years, the applicants rolled the assets into corporations created for each of their children ("ChildCo"). The applicants subscribed