From: Enrichment - Restitution & Unjust Enrichment Legal Issues <ENRICHMENT@LISTS.MCGILL.CA>
To: ENRICHMENT@LISTS.MCGILL.CA
Date: 01/09/2015 19:34:18 UTC
Subject: [RDG] Rescission of dividends

In Re Pallen Trust 2015 BCCA 222, <http://canlii.ca/t/gj1fq>, the B.C. Court of Appeal applied Pitt v Holt to allow rescission of a corporate dividend that had been paid to trustees of a trust. The 2008 transaction was based in part on the general understanding of the effect of an attribution rule in s. 75(2) of the Income Tax Act, an understanding that was shared by the Canada Revenue Agency. However, four years after the dividend was paid, the Federal Court of Appeal interpreted s. 75(2) in such a way that it did not apply to this case. This led the CRA to re-assess the trust's 2008 income tax bill upwards by about half a million dollars (in Canada a trust is a taxpayer). Rescission of the dividend for mistake was allowed.
May I wish everyone whose academic year is beginning a bonne rentrée!
Lionel

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