Rectification Order Can Bail Out The Misguided Taxpayer

If implementing a plan to save tax turns around and instead causes an unintended tax liability, it may be possible to fix the problem with a rectification order. The Court can retroactively alter documents or agreements with a rectification order to actualize the taxpayer's real intention and thereby prevent the Canada Revenue Agency ("CRA") from benefiting from the taxpayer's (or the advisor's) mistake and enjoying an unexpected windfall. What is the doctrine of rectification and how can it be used in tax cases?

A rectification order is an equitable remedy that has been applied in contract law for centuries to fix mistakes in legal instruments that do not reflect the true intentions of the parties. Historically, the classic scenario was where the parties agreed on one word, but accidentally wrote down another. In the modern tax context, any time the taxpayer demonstrably intended to achieve a particular tax result, rectification of the transaction will be permitted, if the