Countries: Canada

Canada vs Deans Knight Income Corporation, May 2023, Supreme Court, Case No. 2023 SCC 16

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In 2007, Forbes Medi-Tech Inc. (now Deans Knight Income Corporation) was a British Columbia-based drug research and nutritional food additive business in financial difficulty. It had accumulated approximately $90 million of unclaimed non-capital losses and other tax credits. Non-capital losses are financial losses resulting from carrying on a business that spends more than it makes […]

Canada vs K&D LOGGING LTD, February 2023, Tax Court, Case No. 2023 TCC 23 (941- 2017-4536(IT)G)

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In 1996 K&D Logging Ltd advanced funds to an affiliated company, Interan. In the Loan Agreement the rate of interest was left blank and there were no other agreement or correspondence between the related parties that addresses if or when interest was payable. In the following years K&D in its tax return reported income with […]

Canada vs Dow Chemicals, February 2023, Supreme Court, Case No. 40276

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In 2022 the Federal Court of Canada ruled in favour of the Revenue Agency and dismissed Dow Chemicals’ appeal regarding the Tax Court’s jurisdiction to make a downward adjustment. The Federal Court held that the Tax Court could not overturn the Revenue Agency’s (Minister’s) opinion that a requested downward adjustment was inappropriate because the Tax […]

Canada vs Loblaw Financial Holdings Inc., December 2021, Supreme Court, Case No 2021 SCC 51

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In 1992, Loblaw Financial Holdings Inc. (“Loblaw Financial”), a Canadian corporation, incorporated a subsidiary in Barbados. The Central Bank of Barbados issued a licence for the subsidiary to operate as an offshore bank named Glenhuron Bank Ltd. (“Glenhuron”). Between 1992 and 2000, important capital investments in Glenhuron were made by Loblaw Financial and affiliated companies […]

Canada vs Alta Energy Luxembourg S.A.R.L., November 2021, Supreme Court, Case No 2021 SCC 49 – 2021-11-26

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ALTA Energy, a resident of Luxembourg, claimed an exemption from Canadian income tax under Article 13(5) of the Canada-Luxembourg Income Tax Treaty in respect of a large capital gain arising from the sale of shares of ALTA Canada, its wholly-owned Canadian subsidiary. At that time, Alta Canada carried on an unconventional shale oil business in […]

Canada vs Cameco Corp., February 2021, Supreme Court, Case No 39368.

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Cameco, together with its subsidiaries, is a large uranium producer and supplier of the services that convert one form of uranium into another form. Cameco had uranium mines in Saskatchewan and uranium refining and processing (conversion) facilities in Ontario. Cameco also had subsidiaries in the United States that owned uranium mines in the United States. […]

Canada vs AgraCity Ltd. and Saskatchewan Ltd. August 2020, Tax Court, 2020 TCC 91

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AgraCity Canada had entered into a Services Agreement with a group company, NewAgco Barbados, in connection with the sale by NewAgco Barbados directly to Canadian farmer-users of a glyphosate-based herbicide (“ClearOut”) a generic version of Bayer-Monsanto’s RoundUp. In reassessing the taxable income of AgraCity for 2007 and 2008 the Canada Revenue Agency relied upon the […]

Canada vs Cameco Corp., June 2020, Federal Court of Appeal, Case No 2020 FCA 112.

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Cameco, together with its subsidiaries, is a large uranium producer and supplier of the services that convert one form of uranium into another form. Cameco had uranium mines in Saskatchewan and uranium refining and processing (conversion) facilities in Ontario. Cameco also had subsidiaries in the United States that owned uranium mines in the United States. […]

Canada vs Loblaw Financial Holdings Inc., April 2020, Federal Court of Appeal, Case No 2020 FCA 79

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In the case of Canadian grocery chain Loblaw, the Canadian Tax Court in 2018 found that using an offshore banking affiliate in a low tax jurisdiction – Barbados – to manage the groups investments did not constitute tax avoidance. However, the Tax Court’s interpretation of a technical provision in the Canadian legislation had the consequence […]

Canada vs Canadian Imperical Bank of Commerce, December 2018, Tax Court of Canada, Case No. 2018 TCC 248

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In the course of an ongoing Canadian triel concerning transfer pricing adjustments in the amounts of $3,000,000,000, the Canadian Imperical Bank of Commerce had brought a motion for leave to call in seven expert witnesses – included four transfer pricing experts. The motion was dismissed by the Court. The Federal Court Rules impose a high […]

Wheaton Precious Metals Reaches Settlement on Canadian Tax Dispute Regarding Foreign Income

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Wheaton Precious Metals Corp. has reached a settlement with the Canada Revenue Agency which provides for a final resolution of Wheaton’s tax appeal in connection with the reassessment under transfer pricing rules of the 2005 to 2010 taxation years related to income generated by the Company’s wholly-owned foreign subsidiaries, Wheaton International, outside of Canada. Wheaton […]

Canada vs Cameco Corp., October 2018, Tax Court of Canada, Case No 2018 TCC 195

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Canadian mining company, Cameco Corp., sells uranium to a wholly owned trading hub, Cameco Europe Ltd., registred in low tax jurisdiction, Switzerland, which then re-sells the uranium to independent buyers. The parties had entered into a series of controlled transactions related to this activity and as a result the Swiss trading hub, Cameco Europe Ltd., was […]

Canada vs Loblaw Companies Ltd., September 2018, Canadian tax court, Case No 2018 TCC 182

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The Canada Revenue Agency had issued a reassessments related to Loblaw’s Barbadian banking subsidiary, Glenhuron, for tax years 2001 – 2010. The tax authorities had determined that Glenhuron did not meet the requirements to be considered a foreign bank under Canadian law, and therefore was not exempt from paying Canadian taxes. “Loblaw took steps to […]

Canada vs Cameco, November 2017, Pending case – C$2.2bn in taxes

Several mining companies are beeing audited by the Canadian Revenue Agency for aggressive tax planning and tax evasion schemes. Among the high-profile companies that have filed pleadings with the Canadian Tax Court are Cameco, Silver Wheaton, Burlington Resources, Conoco Funding Company and Suncor Energy. The CRA says, the companies inappropriately ran international transactions through subsidiary […]

Canada vs. AGF Management Ltd, Nov. 2017, Dispute settlement $71.9-million in back taxes

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Mutual-fund seller AGF Management Ltd. has settled a federal tax case over income shifted from Canada to an overseas subsidiary. The company has recently disclosed that the Canada Revenue Agency sought a total of $71.9-million in back taxes, interest and penalties related to the period spanning 2005-10. An agreement has since been reached, but the […]

Canada vs Univar Holdco, October 2017, Federal Court of Appeal, Case No 2017 FCA 207

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In the case of Univar Holdco the Canadian tax authorities had applied Canadian Anti-Avoidance Rules to a serie of transactions undertaken by the Univar Group following the acquisition of the group’s Dutch parent. The (only) purpose of these transactions was to increase the amount of retained earnings that could be taken out of Canada without […]

Canada vs Cameco Corp, Aug 2017, Federal Court, Case No T-856-15

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In relation to ongoing audits regarding transfer payments, the tax authorities asked the Court to order approximately 25 personnel from Cameco Corporation and its wholly owned subsidiaries to be made available for interview regarding Cameco’s 2010, 2011, and 2012 income tax years. It was confirmed in Court that Cameco has complied with all audit requests […]

Canada vs. Burlington Resources Finance Company, Aug 2017, case NO. TCC 144

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This case i about the legal requirement to submit evidence. The revenue service argues that the disputed questions are relevant to the matters in issue and that Burlington Resources Finance Company has either improperly refused to answer, or not fully answered, the questions. Burlington Resources Finance Company argues that all proper questions have been fully […]

TPG2017 Chapter II paragraph 2.4

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There are situations where transactional profit methods are found to be more appropriate than traditional transaction methods. For example, cases where each of the parties makes unique and valuable contributions in relation to the controlled transaction, or where the parties engage in highly integrated activities, may make a transactional profit split more appropriate than a […]

Developments in Canada – Tax Controversy and Settlements

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Developments in Canada In January 2016, the Federal Court of Appeal affirmed the decision of the Tax Court of Canada in Marzen Artistic Aluminum Ltd. v. The Queen, 2016 FCA 34, upholding most of the CRA’s transfer pricing adjustments and the imposition of transfer pricing penalties. The case, however, provided little insight into the meaning […]

Canada vs. Marzen Artistic Aluminum. January 2016

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The intercompany transactions at issue involved fees paid to the company’s wholly-owned Barbados based subsidiary during taxation years 2000 and 2001 for sales, marketing and support services. The Tax Court of Canada had determined that it was appropriate to apply the CUP method rather than the TNMM, which was advocated by the company’s expert. Canada’s […]

Canada vs. Skechers USA Canada Inc. March 2015, Federal Court of Appeal

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In this case the Federal Court of Appeal upheld the decision of the Canadian International Trade Tribunal in which the tribunal upheld seven decisions – one for each of the years 2005 through 2011 – of the Canada Border Services Agency under subsection 60(4) of Canada’s Customs Act. Skechers Canada, a subsidiary of Skechers USA, purchases footwear to sell […]

Canada vs. McKesson. October 2012. Tax Court

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McKesson is a multinational group involved in wholesale distribution of pharmaceuticals. Its Canadian subsidiary entered into a receivables sales (factoring) agreement with its direct parent, McKesson International Holdings III Sarl in Luxembourg in 2002. Under the agreement, McKesson International Holdings III Sarl agreed to purchase the receivables for about C$460 million and committed to purchasing all the […]

Canada vs Alberta Printed Circuits Ltd., April 2011, Tax Court of Canada, Case No 2011 TCC 232

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Alberta Printed Circuits Ltd (APC, the taxpayer) was a Canadian manufacturer of custom prototype circuit boards. The manufacturing process was initially manual and later automated. In 1996, a Barbados company, APCI Inc.,  was formed via a complex ownership structure. The Barbados company provided services to Alberta Printed Circuits Ltd. by performing setup functions, software and website development, […]

Canada vs Daimler AG, March 2011, $ 2.2bn

According to a U.S. regulatory filing, Daimler AG has paid the federal, Ontario and Alberta governments more than $700 million after accepting a settlement in June, 2010. Daimler further expects to pay the remainder of a $1.5-billion extra tax bill this year to settle a long-standing dispute over how its former partner, Chrysler, accounted for […]

Canada vs. General Electric Capital, November 2010, Federal Court, Case No 2010 FCA 344

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In the case of General Electric Capital, Canada, the issue was if a 1% guarantee fee  paid by General Electric Capital Canada Inc. to its AAA-rated US parent company satisfied the arm’s length test. The Canadian tax administration argued  that implicit support resulted in General Electric Canada having a AAA credit rating, so that the guarantee provided by the US […]

Canada vs Prévost Car Inc, April 2008, Tax Court of Canada, Case No 2008 TCC 231

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Prévost is a resident Canadian corporation who declared and paid dividends to its shareholder Prévost Holding B.V. (“PHB.V.”), a corporation resident in the Netherlands. When Prévost paid the dividends it withheld five percent in tax. The tax authorities issued an assessments against Prévost in respect of the aforementioned dividends. The tax authorities assessed on the […]

Canada vs. Avotus Corporation. November 2006

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The Tax Court of Canada upheld the right of Avotus Corporation to deduct from its Canadian income losses incurred by its subsidiary in Puerto Rico. The Tax Court found that the Puerto Rican subsidiary was Avotus’s agent under a validly executed agency agreement, rejecting the CRA’s claim that the written agreement was unacceptable because the […]

Canada vs Smithkline Beecham Animal Health Inc., May 2002, Federal Court of Appeal, Case No 2002 FCA 229

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Smithkline is a manufacturer of pharmaceutical products. During the period relevant to this appeal, 1981 to 1986, Smithkline manufactured a drug named Tagamet, the active ingredient of which is cimetidine. During those years, Smithkline bought cimetidine from related corporations outside Canada. All of the assessments under appeal are based on the Crown’s allegation that the […]

Canada vs Shell Canada Ltd., December 1998, Federal Court of Appeal, Case No [1999] 3 S.C.R. 616

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This case concerns the tax treatment of a sophisticated financing transaction, known as a “weak currency financing scheme”, undertaken by Shell Canada. In 1988, Shell Canada required about $100 million in United States currency (“US$”) for general corporate purposes. The market rate for a direct borrowing of US$ was 9.1 percent. Instead of borrowing US$ […]

Canada vs Indalex Limited, December 1987, Federal Court of Appeals, Case No 83 NR 185 (FCA)

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Indalex Limited, a Canadian company, purchased its aluminum needs from an associated Bermuda company, Pillar International. Both were subsidiaries of a British parent, which had agreed with Alcan for the supply of aluminum to its subsidiaries by Alcan. Purchases were made from Alcan by Pillar International for Indalex. When Indalex paid Pillar International, Pillar International […]