{"id":118,"date":"2012-09-10T18:31:22","date_gmt":"2012-09-10T18:31:22","guid":{"rendered":"https:\/\/thor.ca\/\/blog\/?p=118"},"modified":"2025-02-12T13:29:35","modified_gmt":"2025-02-12T21:29:35","slug":"tcc-finds-that-shares-were-validly-issued-minute-books-could-be-corrected","status":"publish","type":"post","link":"https:\/\/www.thor.ca\/blog\/2012\/09\/tcc-finds-that-shares-were-validly-issued-minute-books-could-be-corrected\/","title":{"rendered":"TCC finds that shares were validly issued; minute books could be corrected"},"content":{"rendered":"<p>In <em>Twomey v. The Queen<\/em> (2012 TCC 310), the sole issue was whether shares were \u201cissued\u201d to the taxpayer in 1995, and <span style=\"text-decoration: underline\">not<\/span> in 2005.\u00a0 The taxpayer argued that 100 shares were issued to him in 1995, and that 77 of these were sold in 2005.\u00a0 The taxpayer further claimed that the capital gain exemption (\u201cCGE\u201d) for \u201cqualified small business corporation shares\u201d sheltered the gain arising on that sale.\u00a0 The CGE required that the 77 shares be held for at least 2 years prior to the sale.\u00a0 The CRA denied the CGE on the basis that the shares were issued in 2005 (and not 1995).\u00a0 The problem was that the minute books for the company only showed that 1 share was issued to the taxpayer in 1995 (resulting from a miscommunication between the corporate lawyer and the accounting advisors).\u00a0 \u201cCorrecting resolutions\u201d were prepared in <span style=\"text-decoration: underline\">2005<\/span> (before the sale), stating that 100 shares were issued to the taxpayer in 1995.\u00a0 The Tax Court found that, in fact, 100 shares were \u201cissued\u201d in 1995.\u00a0 The company\u2019s general accounting ledger showed a subscription of 100 shares (fully paid) in 1995, the financial statements for the 1995 period showed an issuance of 100 shares (fully paid), and the tax return for the 1995 period showed 100 shares (fully paid).\u00a0 All these documents were approved by the directors of the company at the time, representing \u201ctangible corporate evidence\u201d contradicting the original 1995 entry in the minute books.\u00a0 Accordingly, the 2005 \u201ccorrecting resolution\u201d (in the minute books) was not \u201cretroactive tax planning\u201d, nor did it require any \u201crectification order\u201d from a court.\u00a0 The 2005 resolution simply recorded the actual facts (and not mere intentions), as they existed in 1995.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In <em>Twomey v. The Queen<\/em> (2012 TCC 310), the sole issue was whether shares were \u201cissued\u201d to the taxpayer in 1995, and <span style=\"text-decoration: underline\">not<\/span> in 2005.\u00a0 The taxpayer argued that 100 shares were issued to him in 1995, and&hellip;<\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-118","post","type-post","status-publish","format-standard","hentry","category-corporate-tax"],"_links":{"self":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/118","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/comments?post=118"}],"version-history":[{"count":1,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/118\/revisions"}],"predecessor-version":[{"id":2863,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/118\/revisions\/2863"}],"wp:attachment":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/media?parent=118"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/categories?post=118"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/tags?post=118"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}