Court rules there are limits to reverse or correct unintended tax consequences

Taxpayers do not have a general license to “travel back to through time” with the benefit of hindsight to reverse or correct unintended tax consequences of commercial dealings, held the Quebec Court of Appeal in two separate but related rulings.

The rulings effectively limit the scope of the so-called rectification remedy in a tax context under civil law, according to tax experts. A powerful legal instrument, rectification essentially allows taxpayers, under certain conditions, to correct errors in legal documents or instruments that do not reflect the true intention of the parties, and which lead to unintended consequences. Rectification allows the parties to “fix” the terms of the transaction so that the intended tax consequences are achieved. Its effect is retroactive.

Read More

Leave a Reply

Your email address will not be published. Required fields are marked *