Canada Life – Ontario Superior Court grants requested detailed rectification of an LP wind-up so as to avoid a s. 98(5) rollover

A Canada Life subsidiary (CLICC) clearly intended to realize an accrued loss on its LP interest in a subsidiary partnership by winding it up. CRA reassessed to deny the loss on the basis that the s. 98(5) rollover applied.

Pattillo J granted the requested order that the transactions be deemed to occur as requested by CLICC so that the rollover did not apply, notwithstanding a Crown complaint that the number of proposed rectification transactions was two more than had originally occurred. He noted that arguments that rectification was restricted to correcting mistakes in the instruments used to implement a definite and ascertainable tax plan had been rejected in Fairmont.

Neal Armstrong. Summary of Canada Life Insurance Co. of Canada v. A.G of Canada, 2015 ONSC 281, under General Concepts – Rectification.