CRA settles the Wheaton transfer-pricing dispute by accepting a 30% mark-up on the head office expenses

As noted in the previous post, Wheaton’s appeal of CRA reassessments – which applied s. 247(2) to effectively treat essentially all of the income of Wheaton’s offshore subsidiaries (“Wheaton International”) from precious metal streaming contracts as income of Wheaton – was settled in December 2018. The settlement provided that for all its 2005 and subsequent taxation years (including for the indefinite future, but subject to no changes in law), the only applicable changes to the transfer-pricing practices of Wheaton were that:

  • The service fee charged by Wheaton for the services provided to Wheaton International will be adjusted to:
    • Include capital-raising costs associated with Wheaton for the purpose of funding streaming transactions entered into by Wheaton International; and
    • Increase the mark-up applied to Wheaton’s cost of providing services to Wheaton International, including the above capital-raising costs, from the current 20% to 30%.

Neal Armstrong. Summary of 13 December 2018 Wheaton Precious Metals Press Release under s. 247(2).