Cra To Accept Rectification

The elements or requirements for rectification are the following: a prior agreement; a common intention to avoid tax; the final document did not properly record the common intention of the parties; and a common or mutual mistake. Recognizing this, rectification may also be pursued in respect of unilateral mistakes.

The CRA will not issue rectification or relief from mistake orders if such orders involve retroactive tax planning. Rectification is not a “cure for all” for mistakes made in tax matters, nor is it intended to allow taxpayers to “undo” or “re-order” transactions or engage in retroactive tax planning.

The CRA will oppose a rectification application if: it is not informed in advance about the application; it determines that the taxpayers do not have evidence as to the taxpayers’ initial intention or do not have evidence to show that there was not another intention; in the CRA’s view, the taxpayers are not asking the court to rectify the transaction back to the intended form, but to undo the intended transaction and put in place a new one formed after the original transaction; or if the CRA believes that the taxpayers are seeking rectification in order to influence a tax appeal.