Dow Chemical may raise the issue as to whether a provision that effectively gives CRA the discretion to impose tax is constitutional

It is suggested that in Dow Chemical, the Supreme Court, perhaps on its own initiative, may consider the constitutionality of s. 247(10), which effectively provides the Minister with discretion to determine the amount of tax resulting from taxpayers’ transfer-pricing transactions, without express guidance on how to do so.

Note that Vanguard Coatings (rev’d on narrower grounds in the FCA) stated:

[S]ection 34 of the Excise Tax Act is no paradigm of the rule of law. It is, indeed, so contrary to the rule of law that it can surely be declared to be unconstitutional. It accords arbitrary administrative discretion, without any guidelines or directives, to the Minister whose determination is not subject to any objective second opinion as is inherent in an appeal provision.

S. 53 of the Constitution Act, 1867 provides that Parliament alone has the power to impose a tax, and a provision. such as s. 247(10), which grants the Minister discretion to override results otherwise determined by the legislation, may run counter to Canada’s system of the rule of law (expressly recognized in the preamble to the Constitution Act, 1867 - see also Provincial Judges Reference, [1997] 3 SCR 3, at para. 10 [and see also Mark Anthony]).

Neal Armstrong. Summary of Pascale Desmarais and Olivier Fournier, “Dow Chemical and the Constitutionality of Subsection 247(10),” Canadian Tax Focus. Vol. 13, No. 3, August 2023, p. 10 under Constitution Act, 1867, s. 53.