BC Supreme Court gives taxpayers a second shot at rectifying a deficient trust deed

The BC Supreme Court granted a rectification order to cleanse a trust deed of deficiencies that had caused CRA to assess on the basis that s. 75(2) applied to attribute a substantial capital gain realized by the trust to the settlor (the father).  However, on receiving this rectification order, CRA confirmed its reassessments on the basis that it had discovered further deficiencies in the trust deed that caused s. 75(2) to continue to apply!  The solution?  The taxpayers went back to Court (in a contested motion) to get a further rectification order to correct the further alleged deficiencies.  Dorgan J reasoned that as tax planning (i.e., multiplying the capital gains exemption) was a major purpose of the trust from its inception, rectification relief gave effect the the parties' specific intentions.

Neal Armstrong.  Summary of McPeake v. Canada, 2012 BCSC 132, under Rectification.