Law Times

PAGE 12 FOCUS Tax remedies lawyers representing clients in trusts and estates matters. "Rectifi cation involves fi x- ing a mistake," says Brian Wil- son of Wilson Vukelich LLP in Markham, Ont. "Remission involves a request for relief from the payments of tax, in- terest, and penalties that have been assessed." Rectifi cation, for example, might be available where a tes- tator intended one tax result but got another because of a fl aw in the documentation. "Th e Canada Revenue Agen- cy's position is that they can't fi x the problem, nor can the estate do so on its own," Wilson says. "But the agency recognizes that courts have the power to correct documentation." Rectification, remission key options in trusts matters R BY JULIUS MELNITZER For Law Times ectifi cation and remis- sion are two important remedies available to Th at's not to say, of course, that the CRA will stand idly by while the applicant seeks such an order. "Th e CRA will oppose the application if it believes that it is an attempt to undertake retroac- tive tax planning," Wilson says. Lawyers considering a rec- tifi cation order must deal with the following key issues, ac- cording to a paper on com- mon errors and rectifi cation delivered by Brian Nichols of Toronto's Speigel Nichols Fox LLP at a recent conference or- ganized by the Society of Trust and Estate Practitioners of Canada: • Obtaining the co-operation of any arms-length parties to the transaction. • Dealing with compliance issues pending the rectifi ca- tion application. • Considering whether the at- tempt to rectify is really ret- roactive tax planning. 'The court cannot substitute its decision for that of cabinet,' says Brian Wilson. • Collecting evidence about the intention of the parties. • Determining whether and when to notify the CRA. If the court makes a recti- fi cation order, however, the CRA must abide by it. "Rectifi cation is an eff ective way to solve a tax problem that arose from a good-faith error that did not refl ect a testator's intention," Wilson says. Remission orders are an- other thing entirely. Resort to them arises following an ad- verse tax assessment in accor- dance with s. 23 of the Finan- cial Administration Act. "Th ese are remedies sought in cases of extreme hardship, incorrect advice from CRA offi cials, fi nancial setback coupled with extenuating fac- tors, and unintended results of legislation but they are avail- able only after a taxpayer has unsuccessfully gone through the entire appeal process in relation to a tax assessment," Wilson says. "Essentially, the taxpayer is asking the minister to absolve him or her from tax, interest, and penalties." Because courts don't have the power to absolve taxpayers UNDERSTAND THE LATEST LAW INVOLVED IN CLAIMS AGAINST THE CROWN NEW EDITION LIABILITY OF THE CROWN, 4TH EDITION PETER W. HOGG, PATRICK J. MONAHAN AND WADE K. WRIGHT 40TH ANNIVERSARY EDITION Find reliable guidance in filing claims involving public authorities with Liability of the Crown, 4th Edition — your complete resource to researching the law in this area. This new edition focuses on the extent to which the Crown, in the sense of the executive branch of government, is liable to pay damages or give other redress to persons injured by the exercise of government power. Liability of the Crown, 4th Edition contains a comprehensive review of the law pertaining to the liability of the Crown and its agents in tort, contractually, and pursuant to statute. Each chapter of this seminal work has been completely rewritten to take into account the numerous significant developments in the field that have taken place since this book was last published. This fourth edition includes new chapters on restitution, taking (expropriation), trust, estoppel and Crown as creditor, as well as a concluding summarizing chapter. PREPARE YOURSELF WITH THE EXPERTISE AND INSIGHT OF RENOWNED EXPERTS Gain the vast expertise and insight of three renowned experts in the field, and in particular, that of renowned constitutional law scholar, Peter C. Hogg. You will be confident that you are interpreting the materials correctly, thereby saving time and better serving your clients. from tax liability, remission is an executive matter. On oc- casion, however, courts have recommended that the govern- ment make such orders. "Remission can be granted only by order-in-council and therefore such an order must be approved in cabinet," Wilson explains. "Th e fi le goes to the CRA remissions committee that makes a recommendation to the minister, who in turn makes a recommendation to cabinet." Before the request for re- mission gets to the committee, however, the CRA typically re- fers it to the local taxation offi ce for review and then to the GST rulings directorate in Ottawa. "Th e rulings directorate provides the committee with its recommendation and the committee, in turn, provides its recommendation to the com- missioner of the CRA, who re- ports to the minister," Wilson explains. "Just how long the whole process takes varies from case to case and tends to depend on the facts." In other words, remission involves cases in which there's no doubt that the tax is ow- ing but where its collection would produce a very harsh result. Natural disasters, such as fl oods and ice storms, are frequent bases for remission orders. Such orders may also be available to give retroactive eff ect to jurisprudence or pro- vide relief for groups of good- faith investors adversely aff ect- ed by the tax treatment of the same investments. While there's no right of ap- peal from a decision on a remis- sion application, judicial review to the Federal Court is available. "Th e court cannot substitute its decision for that of cabinet," Wilson notes. "It can only refer the matter back to cabinet for reconsideration if the court de- termines that the government was unreasonable in exercising its discretion." AVAILABLE RISK- FREE FOR 30 DAYS Order online at www.carswell.com Call Toll-Free: 1-800-387-5164 In Toronto: 416-609-3800 OcTOber 24, 2011 • Law Times ORDER # 983635-64364 $225 Hardcover approx. 560 pages July 2011 978-0-7798-3635-2 Shipping and handling are extra. Price subject to change without notice and subject to applicable taxes. 00182DX-A26736-64364-7.875x9.75.indd 1 www.lawtimesnews.com 8/8/11 12:29 PM

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• Extreme Delay
• Polite Affair
• Focus On Trusts & Estates Law