The applicants sought declarations that shares issued to them in corporations created for their children were never validly issued because the shares were allegedly never paid for, and sought rectification of the share registers after CRA reassessments treated them as controlling shareholders who received taxable benefits.
The court declined jurisdiction, holding that the application was in substance an attempt to influence the outcome of a tax dispute that should be determined in the Tax Court of Canada, which was better placed to interpret and apply the relevant corporate law issues in the tax context.
In any event, declaratory relief was refused because there was conflicting evidence on payment, no internal corporate dispute requiring intervention, and potential retroactive disruption to prior corporate acts.
Rectification was also refused because the records accurately reflected the parties' original intention and the requested relief would amount to impermissible retroactive tax planning.
