The extent to which CRA can contradict the written terms of a non-sham agreement is still uncertain

A significant number of decisions suggest that the "parol evidence rule" (that "when the parties to an agreement have apparently set down all its terms in a document, extrinsic evidence is not admissible to add to, subtract from, vary or contradict those terms") does not apply to CRA, as (per Urichuk) "the Minister, not being a party to that agreement, is entitled to rely on any available evidence to support his characterization [thereof]."  However, recent decisions (e.g., General Motors) may suggest a tendency to find that the terms of written agreements, in the absence of a finding of sham, should not be contradicted by extrinsic evidence.  See Contradiction of written contracts or other documents (parol evidence rule).

There also is a U.S. dichotomy.  The U.S. Tax Court has stated that it is "is well settled that the parol evidence rule has no application in Federal tax cases where the Government is not a party or privy to a party to the instrument."  However, the US Court of Appeals for the Third Circuit established the "Danielson rule," that "a party can challenge the tax consequences of his agreement as construed by the Commissioner only by adducing proof which in an action between the parties to the agreement would be admissible to alter that construction or to show its unenforceability because of mistake, undue influence, fraud, duress, etc."

Neal Armstrong.  Summary of Amir Pichhadze, "Can, and Should, the Parol Evidence Rule Be Invoked by or against the Canadian Tax Authorities in Tax Litigation? Lessons from US Jurisprudence", Bulletin for International Taxation, September 2013, p. 474, under General Concepts – Evidence.