The Minister appealed an order rectifying a corporate reorganization involving the division of a family business.
The respondents had transferred shares to a holding company in exchange for promissory notes based on mistaken accounting advice, triggering immediate tax liability under the Income Tax Act instead of a tax-deferred rollover.
The court held that rectification was available where the written transaction failed to reflect the parties' true agreement, which from the outset was to complete the restructuring without immediate tax consequences.
The application judge's findings of a primary and continuing tax-neutral objective were upheld, and the appeal was dismissed with costs.
