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13 December 2016

Supreme Court of Canada concludes general intention of tax neutrality insufficient for rectification in common law and civil law

The Supreme Court of Canada (SCC) on December 9, released its decisions on two cases regarding rectification in the tax context: Canada (Attorney General) v. Fairmont Hotels Inc., 2016 SCC 56 (Fairmont), and Jean Coutu Group (PJC) Inc. v Canada (Attorney General), 2016 SCC 55 (Jean Coutu). Both decisions agree that a general intention of tax neutrality is insufficient to justify a rectification order. Rectification applies to tax and non-tax contexts in the same way. It is only available when there is an error in an instrument that incorrectly records the parties' agreement. It is not available to rectify an agreement that led to unintended tax consequences.

A Tax Alert prepared by Ernst & Young Canada, and attached below, provides additional details.

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ATTACHMENT

Full text of Tax Alert 2016-2131

Document ID: 2016-2131

 

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