Backdating contracts verbal contracts and contract splitting are considered to
An agreement has been found to be effective at a rate prior to the date on which it was evidenced in writing even where the written agreement did not refer to the prior date (Mc Anulty).
For example, if an asset purchase agreement specifies an effective date of January 1 but it is found that the asset purchase did not actually occur until March 1, the characterization of the transaction under the Act should respect the fact that the income earned between January 1 and March 1 is the property of the purchaser rather than of the vendor.Agreements for non-arm's length transfers of property by taxpayers to a corporation for share consideration typically contain a price adjustment clause under which the redemption amount of preferred shares received by the taxpayers, or the quantity of common shares issued to them, will be adjusted if the initially stipulated redemption amount or number of common shares issued to them proves to be different than the fair market value (net of assumed liabilities or debt issued to them) of the property they transferred to the corporation.Price adjustment clauses also may be utilized in other types of transactions.In such a case the transaction typically occurs on the subsequent date, and not on the date of the agreement.Accordingly, the existence of an oral agreement on a particular date does not necessarily establish that the transaction described by that agreement occurred on that date (Scandia Plate, Barnabe, Kettle River Cf. Similarly, a trust deed cannot have retrospective effect if at the earlier time the settlor lacked the requisite intention (Kingsdale Securities), and it would appear that a purported share redemption will not be effective on a stipulated date that is prior to the date on which a condition precedent to the share redemption occurrs (Nussey).Second, the corporate doctrine of pre-incorporation contracts potentially means that an agreement that was made before a corporation came into existence may be treated as giving rise to a transaction of the corporation (see Shaw).
Third, where a contract provides that where any provision thereof is found to be invalid, the contract shall be rectified so as to give effect to the business intent of the parties, a subsequent rectification of the contract pursuant to this clause by the parities themselves very well may be respected as having retroactive effect for tax purposes ().
Furthermore, even if a document is executed on or before the date in the document on which it is stipulated to be effective, there may be a subsequent amendment to the document - and the parties may wish the transaction to be considered to occur for tax purposes on the original effective date on the basis described in the amended document.
Except for transactions where the has been pleaded and found to be applicable (Bouchard), or where a specific statute requires implementation through a specific document (e.g., amending share capital through filing articles of amendment, or amalgamating through filing articles of amalgamation), many transactions can be implemented orally, i.e., without written documentation (although for obvious reasons, this often will be undesirable).
The taxpayer fraudulently caused his employer to pay invoices for work on renovation to his home in 19.
After the renovations were completed in 1984, he informed the company vice-president and controller that he had done so, following which it was agreed that the misappropriated funds would be treated as a loan to him.
However, the March 1 effective date might mean that the transfer of that property from the vendor to the purchaser on closing is characterized as an adjustment to proceeds of disposition, rather than as a transfer of income that has been earned by the purchaser. There are exceptions to the rule that persons should not be considered to have effected a particular transaction in a specific way on a date if at that time they lacked the requisite intention to do so.