MEGlobal Canada ULC appealed to the Tax Court of Canada after the Minister refused to grant a downward transfer pricing adjustment. The Court quashed the appeal for lack of jurisdiction, finding that the refusal was a discretionary decision rather than a formal assessment. Since the Tax Court can only hear appeals concerning assessments, it could not review the Minister's discretionary authority. The Court also denied the company's request to amend its Notice of Appeal ... Read more

The case concerned the deductibility of feasibility study costs of CAD 36,207,810 claimed by ExxonMobil Canada Resources Company (the Appellant), a Canadian subsidiary of ExxonMobil Corporation (EM Corp.), in respect of its 2001 taxation year. The Appellant had been assigned a 68% share of EMPC’s one-third participating interest in a major pipeline feasibility study — the Alaskan Gas Pipeline Project — under a Partial Assignment and Cost Allocation Agreement (PACA Agreement). The project aimed to evaluate and progress a natural gas pipeline from Prudhoe Bay on the Alaska North Slope through Western Canada into the lower 48 United States. Total feasibility costs under the project approximated USD 125 million. The Minister of National Revenue disallowed the deduction of the Feasibility Study Costs on two alternative grounds: (i) that the costs were not incurred for the purpose of gaining or producing income from a business or ... Read more

MEGlobal Canada ULC appealed to the Tax Court of Canada after the Minister refused to grant a downward transfer pricing adjustment. The Court quashed the appeal for lack of jurisdiction, finding that the refusal was a discretionary decision rather than a formal assessment. Since the Tax Court can only hear appeals concerning assessments, it could not review the Minister's discretionary authority. The Court also denied the company's request to amend its Notice of Appeal ... Read more

MEGlobal Canada ULC appealed to the Tax Court of Canada after the Minister refused to grant a downward transfer pricing adjustment. The Court quashed the appeal for lack of jurisdiction, finding that the refusal was a discretionary decision rather than a formal assessment. Since the Tax Court can only hear appeals concerning assessments, it could not review the Minister's discretionary authority. The Court also denied the company's request to amend its Notice of Appeal ... Read more

Dow Chemical challenged the Minister of National Revenue's discretionary refusal to grant a downward transfer pricing adjustment under section 247(10) of the Income Tax Act. The Canadian Supreme Court dismissed Dow's appeal in 2024, confirming that the Tax Court lacks jurisdiction to review such discretionary ministerial decisions, and that judicial review must instead be sought before the Federal Court ... Read more

Two Barbados shareholders of Husky Energy transferred shares to Luxembourg companies under securities lending arrangements before dividends were paid, allowing Husky to withhold at a reduced 5% treaty rate. The Canada Tax Court found the Luxembourg companies were not the beneficial owners of the dividends, as they were obligated to remit equivalent compensation to the Barbados companies, and held Husky liable for failing to withhold at the full 25% non-convention rate ... Read more

Blackberry Limited sought to introduce two expert reports in a Tax Court of Canada appeal concerning a CAD 17.1 million FAPI assessment relating to R&D services from US affiliates. The tax authority challenged the reports as irrelevant, unnecessary, and prejudicial. Applying the Mohan and White Burgess two-step admissibility test, the court ruled in favour of the tax authority and excluded both expert reports in 2023 ... Read more

Deans Knight Income Corporation entered a complex investment agreement with Matco Capital designed to exploit $90 million in accumulated non-capital losses while avoiding the acquisition-of-control restrictions under section 111(5) of Canada's Income Tax Act. The Canada Revenue Agency applied the General Anti-Avoidance Rule to deny the deductions. In 2023, the Supreme Court of Canada upheld the tax authority's position, finding the arrangement constituted abusive tax avoidance ... Read more

K&D Logging Ltd advanced funds to an affiliated company under a loan agreement with no stated interest rate. Despite reporting prescribed-rate interest income in prior years, no interest was ever paid. When K&D wrote off the accrued interest receivables as bad debts in 2005 and 2006, the CRA denied the deductions. Canada's Tax Court upheld the assessment in 2023, finding no enforceable interest obligation existed ... Read more

Dow Chemical sought a downward transfer pricing adjustment, but the Federal Court of Canada held in 2022 that the Tax Court lacked jurisdiction to review the Revenue Agency's opinion, as it is not an assessment. Dow Chemical appealed, and in February 2023 the Supreme Court of Canada granted leave to appeal, agreeing to consider the question of the Tax Court's jurisdiction over downward adjustments ... Read more

Dow Chemical Canada ULC challenged the Minister's denial of a downward transfer pricing adjustment under subsection 247(10) of Canada's Income Tax Act. The Federal Court of Appeal considered whether such a denial falls within the Tax Court of Canada's exclusive original jurisdiction. The court upheld the Tax Court's position that it retains jurisdiction where the resulting assessment has been properly appealed, deciding in favour of the tax authority's interpretation ... Read more

Loblaw Financial Holdings incorporated an offshore bank subsidiary in Barbados in 1992 and excluded its income from Canadian tax returns under the FAPI financial institution exception. The Canada Revenue Agency challenged the exclusion and applied GAAR. Canada's Supreme Court ruled mostly in favour of the taxpayer in December 2021, upholding the financial institution exception and rejecting the general anti-avoidance rule challenge ... Read more

A Luxembourg resident company claimed a capital gains exemption under the Canada-Luxembourg Income Tax Treaty following the sale of shares in its Canadian shale oil subsidiary. The Canadian tax authorities denied the exemption and applied GAAR, arguing treaty shopping. The Supreme Court of Canada ruled in favour of the taxpayer in 2021, finding the exemption applied and that GAAR was not triggered ... Read more

Bank of Nova Scotia sought to carry back a non-capital loss to offset a transfer pricing adjustment arising from a settlement with Canadian tax authorities. The dispute concerned whether interest on the carryback should run from the date of the written request or the original return filing date. Canada's Tax Court dismissed the appeal in 2021, ruling the deemed payment date was 30 days after the written request, consistent with the unambiguous statutory wording ... Read more

An Amdocs tax manager failed to inform management of CRA audits covering FY 2012–2014, resulting in reassessments. By the time superiors were notified in 2019, the limitation period for objecting to the FY 2012 reassessment of $3.35 million had expired. The Canada Federal Court dismissed Amdocs's judicial review application in 2021, finding the Minister's decision to deny late objection rights reasonable and legally justified ... Read more

Cameco, a major Canadian uranium producer, was assessed by the CRA for tax years 2003, 2005, and 2006 on the basis that transactions with its Swiss trading subsidiary constituted a sham profit-shifting arrangement. The Tax Court and Federal Court of Appeal both ruled in Cameco's favour. In February 2021, the Canadian Supreme Court dismissed the tax authority's application for leave to appeal, confirming the decisions in favour of the taxpayer ... Read more

Dow Chemical Canada ULC appealed a 2006 reassessment after the Canada Revenue Authority denied a transfer pricing downward adjustment that had been applied in the 2007 year. The Tax Court of Canada considered whether it had jurisdiction to review the denial of the adjustment under section 247 of the Income Tax Act, delivering a decision on the interpretation of the court's appellate scope in transfer pricing disputes ... Read more

AgraCity Canada entered a services agreement with its Barbados affiliate, NewAgco, which sold herbicide directly to Canadian farmers. The Canada Revenue Agency reallocated all of NewAgco's profits to AgraCity, arguing the Barbados entity contributed no real value. The Tax Court of Canada in 2020 ruled in favour of the taxpayer, finding the transactions were not a sham and rejecting the full profit reallocation under the transfer pricing rules ... Read more

Bayer Inc., a Canadian subsidiary of Bayer AG Germany, was audited by the Canada Revenue Agency for its 2013–2015 taxation years. The CRA requested third-party agreements related to pharmaceutical activities across OECD nations. Bayer Canada contested the documentation requests. Canada's Federal Court ruled in favour of the tax authority in 2020, upholding the CRA's right to obtain the requested records ... Read more

Cameco, a major Canadian uranium producer, routed purchases of Russian uranium through its Luxembourg subsidiary under long-term contracts. The Canada Revenue Agency challenged the arrangements as shams and sought recharacterisation of profits. The Federal Court of Appeal upheld the Tax Court's decision in favour of Cameco in 2020, confirming the transactions were genuine and priced on arm's length terms ... Read more

Canadian grocery chain Loblaw used a Barbados-based offshore banking affiliate to manage group investments. The CRA challenged the arrangement under GAAR provisions, and the Tax Court had upheld a $368 million tax liability despite finding no avoidance. Canada's Federal Court of Appeal overturned that decision in 2020, delivering a judgment largely in favour of Loblaw and rejecting the technical basis for the tax assessment ... Read more

Canadian Imperial Bank of Commerce sought leave to call seven expert witnesses, including four transfer pricing specialists, in a $3 billion transfer pricing dispute. The Tax Court of Canada dismissed the motion in 2018, finding the Federal Court Rules impose a high threshold, the issues lacked broad public significance, and the taxpayer failed to show the expert evidence would not be duplicative ... Read more

Canada's Tax Court ruled in favour of Cameco Corp. in a landmark 2018 decision, rejecting the Canadian Revenue Authority's assertion that controlled uranium purchase and sale agreements with Swiss subsidiary Cameco Europe Ltd. were a sham. The court found the transactions were genuine and priced at arm's length, dismissing approximately US$1.5 billion in taxes, interest, and penalties. The CRA subsequently appealed to the Federal Court of Appeal ... Read more

A Luxembourg resident company claimed a capital gains exemption under the Canada-Luxembourg Income Tax Treaty following the sale of shares in its Canadian subsidiary, which operated a shale oil business in Alberta. The Canadian tax authorities denied the exemption, invoking the immovable property provision. The Tax Court of Canada ruled in favour of the taxpayer in 2018, finding the excluded property exception applied ... Read more

Bank of Montreal implemented a tower structure to lend $1.4 billion USD to its US subsidiaries, avoiding withholding tax through a hybrid mismatch arrangement. The Canada Revenue Agency challenged the structure under the General Anti-Avoidance Rule in section 245 of the Income Tax Act. The Tax Court of Canada found in favour of BMO in 2018, ruling that no tax benefit arose and that GAAR did not apply to the transactions ... Read more

Canada Revenue Agency reassessed Loblaw for tax years 2001–2010, arguing its Barbadian subsidiary Glenhuron did not qualify as a foreign bank under Canadian law and was therefore not exempt from Canadian tax on foreign accrual property income. The Tax Court found the transactions did produce a tax benefit but were entered primarily for non-tax purposes, concluding they were not avoidance transactions and ruling in favour of Loblaw ... Read more

Following Univar Group's 2007 post-acquisition restructuring, Canadian tax authorities applied the General Anti-Avoidance Rule, arguing the sole purpose was to increase retained earnings extractable from Canada without withholding tax. The Federal Court of Appeal overturned the Tax Court's decision in 2017, finding that abuse of the Act had not been established and that subsequent legislative amendments could not retroactively confirm earlier transactions were abusive ... Read more

The Canadian tax authority sought a court order compelling around 25 Cameco Corporation personnel to submit to oral interviews during transfer pricing audits for 2010–2012. Cameco had complied with all other audit requests but refused oral interviews given ongoing Tax Court litigation. The Federal Court dismissed the application in 2017, ruling the Minister had not proven non-compliance with the Income Tax Act and did not hold unlimited audit powers ... Read more

A Canadian financing subsidiary paid guarantee fees to its US parent, Burlington Resources Inc., in connection with public debt used to fund affiliated Canadian oil and gas operations. The Canadian Revenue Service challenged the deductibility of those fees and disputed the adequacy of evidence submitted. The Tax Court of Canada ruled in favour of the taxpayer in 2017, finding that all proper questions had been fully answered ... Read more

A Canadian taxpayer challenged the Canada Revenue Agency's authority to issue a second reassessment after Canadian and US competent authorities had already agreed on a Mutual Agreement Procedure settlement. The Tax Court of Canada, in 2017, held that a competent authority MAP settlement was binding and precluded any subsequent reassessment seeking to further increase the taxpayer's income ... Read more

A Canadian aluminum manufacturer paid fees to its wholly-owned Barbados subsidiary for sales, marketing, and support services in 2000 and 2001. The CRA reassessed the taxable income, favouring the CUP method over the TNMM proposed by the taxpayer's expert. Canada's Federal Court of Appeal upheld the 2014 Tax Court decision, confirming that CRA had been largely correct in its transfer pricing reassessment ... Read more

Skechers Canada, a subsidiary of Skechers USA, made cost-sharing agreement payments to its parent for brand development and R&D. The Canada Border Services Agency argued these payments formed part of the customs value of imported footwear. The Federal Court of Appeal upheld the Canadian International Trade Tribunal's decision in 2015, confirming that CSA payments relating to R&D were included in the price paid or payable for customs valuation purposes ... Read more

Following its 2013 decision, the Tax Court of Canada's Judge Boyle recused himself in September 2014 from completing the McKesson Canada transfer pricing proceeding, including costs submissions and confidential information orders. The case involved inter-company accounts receivable factoring arrangements. McKesson later withdrew its Federal Court appeal and reached a settlement with the Canada Revenue Agency, recording a $122 million charge related to the unfavourable 2013 Tax Court ruling ... Read more

McKesson Canada entered a factoring agreement with its Luxembourg parent, selling C$460 million in receivables at a 2.206% discount. The Canada Revenue Agency challenged the discount rate as exceeding arm's length terms, applying 1.013% instead. The Tax Court of Canada upheld the transfer pricing adjustment in 2013, finding the original discount rate did not reflect what independent parties would have agreed given McKesson Canada's strong credit profile ... Read more

TeleTech Canada sought judicial review of the Canada Revenue Agency's alleged refusal to grant relief from double taxation under Articles IX and XXVI of the Canada-US Tax Treaty, including binding arbitration. The Federal Court found no continuing refusal existed, concluding that two discrete CRA decisions had been made and that TeleTech Canada failed to establish entitlement to mandamus, dismissing the application in 2013 ... Read more

GlaxoSmithKline Inc. purchased ranitidine, the active ingredient in Zantac, from a related party at prices the Canadian tax authority challenged as unreasonably high. The Supreme Court of Canada partially reversed the Tax Court's decision and affirmed the Federal Court of Appeal, holding that other related transactions must be considered when assessing transfer price reasonableness. The court remanded the matter to the Tax Court for re-examination without ruling on the methodology itself ... Read more

A Canadian subsidiary paid royalties to a Dutch holding company, which remitted 90% to an affiliated Netherlands Antilles entity. The Canadian tax authority denied the reduced 10% treaty withholding rate, arguing the Dutch company lacked beneficial ownership. Canada's Tax Court disagreed, finding the Dutch company retained sufficient discretion over the royalty funds to qualify as beneficial owner, and ruled in favour of the taxpayer in 2012 ... Read more

A Canadian manufacturer of custom circuit boards was assessed by the CRA for alleged overpayments to its Barbados affiliate for setup and non-setup services. The Tax Court of Canada accepted internal comparables supporting the CUP method for setup fees, ruling those payments were arm's length, while rejecting the CRA's application of TNMM. The court applied the 1995 OECD method hierarchy, deciding mostly in favour of the taxpayer ... Read more

General Electric Capital Canada paid a 1% guarantee fee to its AAA-rated US parent. The Canadian tax authority argued implicit parental support elevated the subsidiary's credit rating, reducing the guarantee's value. Canada's Federal Court of Appeal upheld the Tax Court's yield approach, confirming implicit support must be considered under the arm's length principle and that the 1% fee did not exceed arm's length pricing ... Read more

A US-resident insurer used Canadian field agents to provide life insurance to Canadian members. The Canada Revenue Authority assessed whether this created a permanent establishment under the Canada-US Treaty, either via a fixed place of business or dependent agents. The Tax Court ruled in favour of the taxpayer in 2008, finding the field agents were independent contractors and no permanent establishment existed under Article V of the treaty ... Read more

A Canadian corporation withheld five percent tax on dividends paid to its Dutch holding company shareholder. Canadian tax authorities argued the true beneficial owners were the UK and Swedish corporate shareholders of the Dutch entity. The Tax Court of Canada rejected this conduit argument in 2008, finding the Dutch holding company was the legitimate beneficial owner and had sufficient discretion over the funds received ... Read more

A Luxembourg investment company sold shares in a Canadian mining firm, realising a capital gain of over $425 million. Canada's tax authority applied the General Anti-Avoidance Rule to deny treaty protection under the Canada-Luxembourg tax convention. The Tax Court and, on appeal, the Federal Court of Canada both ruled in favour of the taxpayer in 2007, finding no abuse or misuse of the treaty's capital gains exemption provision ... Read more

A Canadian corporation sought to deduct losses from its Puerto Rico subsidiary, which it treated as its agent under a written agreement. The CRA challenged the arrangement, arguing the subsidiary's conduct was inconsistent with an agency relationship. The Tax Court of Canada ruled in favour of Avotus Corporation in 2006, finding the agency agreement was validly executed and the deduction was allowable ... Read more

A Luxembourg-based company challenged a Canadian tax assessment that denied treaty exemption on a $425 million capital gain from selling shares in Diamond Fields Resources. The tax authority applied general anti-avoidance rules, arguing the transactions formed an abusive series. The Tax Court of Canada ruled in the taxpayer's favour in 2006, finding the sale was not part of an avoidance transaction series and setting aside the assessment ... Read more

The CRA assessed Univar Canada for fiscal years 1995–1999, invoking ITA 95(6) to deem shares of a Barbados subsidiary not acquired on the basis that the principal purpose was to avoid or defer Canadian tax. The Tax Court of Canada allowed all six appeals in 2005, referring the reassessments back to the Minister for reconsideration, finding the provision had been misapplied to the taxpayer's offshore financing structure ... Read more

A Canadian pharmaceutical manufacturer purchased the active ingredient cimetidine from related foreign suppliers at prices the tax authority deemed excessive by $66.9 million over 1981–1986. Applying the comparable uncontrolled price method, authorities reassessed Smithkline's taxable income accordingly. The Tax Court dismissed Smithkline's objections, and in 2002 the Federal Court of Appeal upheld that decision, confirming the CUP method and the resulting income adjustments in favour of the Crown ... Read more

Shell Canada borrowed NZ$150 million at 15.4% interest and converted proceeds to US$100 million, generating a US$21 million currency gain on repayment. The Canadian tax authority challenged the deductibility of the higher NZ$ interest rate and the gain's characterisation. The Supreme Court of Canada in 1998 ruled on the proper interpretation of the income tax rules governing interest deductibility and capital treatment in this cross-currency financing arrangement ... Read more

A Canadian aluminum purchaser routed transactions through an associated Bermuda intermediary that retained part of an Alcan volume discount, reducing Canadian taxable income. The Canadian tax authority assessed the retained discount as income to Indalex and claimed withholding tax on amounts kept offshore. The Federal Court of Appeal dismissed Indalex's appeal in 1987, confirming the arrangement was a non-arm's length, artificial transaction that unduly reduced the company's Canadian income ... Read more

A Canadian corporation purchased a farm from its controlling shareholder at $600,000, far exceeding the original $90,000 cost, then claimed capital cost allowance on the inflated price. The tax authority rejected the claim, basing allowance on original cost. The Supreme Court dismissed the corporation's appeal in 1955, confirming that the burden of proof lay with the taxpayer to disprove the Minister's non-arm's length determination, which it failed to do ... Read more