This article was first published by the Canadian Tax
Foundation in (2019) 9:2 Canadian Tax Focus.
In the two years since the SCC narrowed the availability of
rectification in Fairmont Hotels (
2016 SCC 56), provincial superior and appellate courts have
attempted to interpret the new limits placed on rectification. The
post-Fairmont jurisprudence has largely been determined by
the specific facts of each case, but taxpayer success has depended
on the existence of contemporaneous documents that demonstrate a
specific intention at the time of the transaction—that is, a
prior agreement with definite and ascertainable terms. If this test
is met, rectification is not limited to clerical errors. However,
relief is not available to alter a tax-driven corporate transaction
by adding steps or fundamentally changing the transaction
itself.
