Oct 20, 2023
Tax planning is very difficult and stressful to handle on your own and it is not at all easy to achieve the tax planning technique which perfectly fits the case at the first go, so in case of tax errors a rectification order provides a safety net for taxpayers who make a tax planning error. If you are subject to any adverse taxes from misguided tax planning or its implementation, a rectification order may be an appropriate remedy for you. Our best Toronto income tax planning lawyers will provide you with effective ways to overcome any unintended tax planning errors. When a taxpayer encounters tax consequences due to tax planning tax errors our experienced Toronto tax lawyers may be able to obtain a rectification order from a provincial court that will correct the document or instrument giving rise to the unintended tax consequences.
Significance of rectification order
A rectification order is a feature of Anglo-Canadian contract law, and has particular significance for undoing tax-planning errors in some cases. Once such an order is obtained, the Canada Revenue Agency (“CRA”) will be bound by the provincial court’s decision. When due to a error the documents do not reflect the original intention of the parties then in such a case a rectification order is used to correct that document. A rectification order is an equitable remedy which the courts grant to provide the taxpayer with a second chance but undoing the mistake. A rectification order traces its roots to the courts of equity and thus can only be decided by certain provincial courts that have the proper jurisdiction. Thus, this remedy cannot be issued by the Tax Court of Canada. Hence proper jurisdiction is very essential. In the tax context, the courts have not limited this remedy to correcting inadvertent drafting errors but they have also used it to correct errors due to a misunderstanding of the facts or the law.
Seek a professional income tax planning lawyers advice
The remedy of obtaining a rectification order has met with strong opposition from the CRA because it suggests that courts will retroactively fix agreements to conform to the parties’ tax planning goals, even though the agreement itself was drafted exactly as the parties intended. Contact our best Toronto income tax planning lawyers to determine if you can avail yourself of this remedy. A rectification order means that botched tax planning will be given a second chance. Tax planning is difficult to manage on your own and thus errors can be made but our top Toronto income tax planning lawyers will not only provide effective tax planning techniques but also help you correct your tax planning errors. You can speak with our Toronto income tax planning lawyers and we will work with you to find a solution that best fits your case.
FAQ
What common mistakes are made on tax returns?
These days, you can fill your tax returns online. This eliminates the need to send invoices and receipts. So, many people forget to have such documents handy, which creates complications in tax disputes. Some people also claim non-existent or ineligible expenses.
At times taxpayers can neglect to claim tax credits and other allowed exemptions. It’s also common to see them fail to transfer unused credits to their family or misreport their marital status.
Such issues may not seem apparent to the average person. That’s why it’s wise to work with a qualified accountant to avoid paying more or getting penalties.
What is a rectification order?
At times, clerical and other drafting errors on agreement documents can create legal complexities. A rectification order gives such signatories the chance to clear up such errors. This ensures the draft restores the deal to its intended purpose.
Both parties can settle it, but a court rectification order carries more weight. Such an order undoes any tax consequences that came before the rectification form. It’s also more binding and recognized by the CRA.
What is rescission?
Both parties can settle it, but a court rectification order carries more weight. Such an order undoes any tax consequences that came before the rectification form. It’s also more binding and recognized by the CRA.
Can I sue and hold my accountant liable for tax planning errors?
As far as the Canada Revenue Agency (CRA) is concerned, the buck stops with the taxpayer after signing off on the accountant’s work. However, you could sue the accountant if they were negligent in the preparation of the tax files. Mostly, accountants have errors and omissions insurance to compensate you if it turns out they made a mistake preparing your return.
When should I rectify my tax planning errors?
Once you’ve filed your return, you can’t file a new one. But you can rectify the original by way of an adjustment as soon as you realize your mistakes. However, you must wait until you have received your Notice of Assessment before submitting any adjustment requests. This is important because an early adjustment request may lead to unnecessary delays in processing time for both the original return and the adjustment. Also, CRA may adjust your original return for you.
What happens if I don’t undo my tax planning errors?
Whatever the reason, you should correct any error as quickly as possible. In some cases, there are legal time limits to making adjustments. And the longer you leave it, the greater the possible consequences in terms of interest and penalties you may have to pay, if the amendment increases the money you owe. Seek a professional income tax planning lawyers advise at Tax Law Canada.
