Tax Correction And Rectification: Getting It Right The Second Time

You are entitled to, and expected to, conduct your affairs in a way that will minimize the taxes you pay.

When you are carrying out a transaction, (including declaring beneficiaries, setting up shares in a company, or performing any other kind of business transaction,) you usually have an array of methods available to you. Often, you rely on the advice of professionals such as accountants, business lawyers and financial planners to help you avoid unnecessary taxation.

Unfortunately, business and tax law can be complex. Some decisions end up costing you more taxes, not less.

Sometimes you only find out when the CRA reassesses you. Sometimes you find out when you hire a new accountant who spots the error.

However it happens, Junkin Law Office may be able to help you make things right.

Calling For A Redo

If a transaction does not reflect the taxpayer's intentions, especially the tax consequences of the transaction, the courts, in certain circumstances, allow the parties to a transaction to revise the transaction to reflect the actual intention, after the fact. For rectification to be effective, a Court Order is needed.

There are some restrictions to tax correction:

  • A rectification is meant to reflect the true intention of the parties, not just a choice that you now believe would be better for you, taxwise.
  • The rectification must be based on a mistake made by one or more parties.
  • You cannot simply change a business arrangement if doing so would cause a disadvantage to one of the parties of the current arrangement. The remedy is supposed to create a fair result.
  • The rectification relates back to the time of execution of the transaction.
  • There must be some kind of evidence of the tax-related intent.

The fact that the CRA might lose taxes if you succeed in tax rectification is not a consideration. However, if the CRA believes the process is being abused, and that the parties did not make a mistake or did not intend to avoid paying taxes, CRA may challenge your position in court.

Contact Junkin Law Office

Let our office help you rectify honest mistakes. Call us at 604-239-3346 or online to find out how we can help. We represent businesses throughout North Vancouver and surrounding areas.