Graymar – Alberta Court of Queen’s Bench suggests that the Juliar rectification line of cases incorrectly imputes a tax avoidance purpose in transactions where specific tax consequences were not addressed at the time

Brown J found that transactions which were carried out for debt restructuring reasons could not be rectified to avoid a s. 15(2) inclusion, as this tax issue was not identified until later.  He stated:

Juliar sits uneasily with Supreme Court’s direction in Performance Industries and Shafron that rectification is granted to restore a transaction to its original purpose, and not to avoid an unintended effect.  While, therefore, rectification is available in order to avoid a tax disadvantage which the parties had originally transacted to avoid, it is not available to avoid an unintended tax disadvantage which the parties had not anticipated at the time of transacting.

Comments like this increase the odds that at some point the Supreme Court will review the correctness of the Juliar line of cases.

Neal Armstrong.  Summary of Graymar Equipment (2008) Inc v Canada (Attorney General), 2014 ABQB 154 under General Concepts – Rectification.