The applicant corporation sought an order to rectify its corporate records to retroactively declare a tax-free capital dividend.
The sole shareholder had drawn funds from the corporation, which were recorded as shareholder loans and subsequently assessed as personal income by the CRA.
The applicant argued that the intention of a prior rollover agreement was to permit tax-free withdrawals.
The court dismissed the application, applying the Supreme Court's decision in Fairmont Hotels, holding that rectification is not available for retroactive tax planning or to cure a failure to maintain proper corporate records where no specific mechanism was agreed upon and improperly recorded.
