In the recent decision of Fairmont Hotels, the Supreme Court of Canada narrowed the scope of the Juliar decision. Without getting into complex details, the main issue in the Fairmont case was whether the court would rectify an agreement that provided a redemption of shares by a corporation into one that provided a loan from the corporation. The taxpayers argued that the share redemption frustrated their intent that the transaction takes place on a tax-neutral basis, and as such asked for the rectification order. However, the Supreme Court held that a general ongoing intention to avoid or reduce tax was not enough to grant rectification.
This letter summarizes recent tax developments and tax planning opportunities; however, we recommend that you consult with an expert before embarking on any of the suggestions contained in this letter, which are appropriate to your own specific requirements.