Oldcastle Building Products – Tax Court of Canada finds that s. 152(9) “allow[s] the Minister to support a reassessment using the broadest range of possible alternative approaches”

After discoveries had been completed for the taxpayer’s appeal of reassessments that inter alia denied interest on a $300 million borrowing on the basis that it was not used for an income-producing purpose, the Crown sought to amend its pleadings to identify the thin capitalization rules as an alternative argument or basis for disallowing the taxpayer's interest expense.

Before finding that the post-2016 version of s. 152(9) did not preclude this requested amendment, and allowing it, Yuan J stated that s. 152(9) now “allow[s] the Minister to support a reassessment using the broadest range of possible alternative approaches, subject to the express limitations set out in paragraphs 152(9)(a) and (b), provided that the amount payable under the reassessment does not increase.”

He also indicated that “the 2016 amendments … overrode the requirement from prior case law that the tax under the alternative argument had to be derived from the same transaction that produced the originally assessed tax” – but went on to find that, in any event, here the alternative bases for denying the interest expense were based on the same transaction, being the borrowing.

Neal Armstrong. Summary of Oldcastle Building Products Canada Inc. v. The King, 2025 TCC 107 under s. 152(9).