The taxpayer’s accountants met with him on October 6, 2011, when it was agreed that he would transfer personally-owned land and equipment on s. 85 rollover basis to his corporation in order to facilitate paying off a loan owing by him to the corporation. The accountants took notes of this decision, but neglected to direct the appellants' law firm to prepare the related documents. The documents were prepared, and then executed on June 6, 2013, shortly following notice of a CRA audit, with the stated effective date of the transfer being January 1, 2011. CRA found that a s. 85 rollover transfer had not been accomplished in 2011, but a proposed reassessment was delayed to allow the taxpayers to seek rectification. The chambers judge rectified the specified effective date from January 1, 2011 to October 6, 2011, but declined to declare the documents to be retroactively effective as of October 6, 2011.
In dismissing the appeal, Lane J. stated (at paras 29, 34):
… The Chambers judge was correct to limit the application of the rectification remedy as he did. He saw the application for a declaration for what it was – an attempt to obtain equitable relief not available from the Tax Court, which is a superior court of record but not a court of inherent jurisdiction, and to thereby attempt to determine the outcome of an assessment appeal by essentially binding the hands of that Court. …
The Chambers judge properly limited his decision to the issue between the appellants themselves. He correctly identified the intended purpose of the application and recognized the specialized nature of the Tax Court and its jurisdiction to decide the ultimate issue concerning the tax implications of the rollover. He correctly declined to effectively pronounce on that issue.