Canadian Forest Navigation – Tax Court finds that foreign rectification orders are not binding on the Tax Court (but can be given weight)

After receiving dividends from Barbados and Cyprus subsidiaries, a Quebec company responded to reassessments of the dividends by obtaining rectification orders from the applicable Barbados and Cyprus courts declaring that the amounts instead were loans to it. In response to a question to this effect posed under Rule 58, Lamarre ACJ found that the federal Crown “is not bound by the foreign judgments since they have not been recognized in Canada by a court of competent jurisdiction, and therefore [the Crown] is not precluded from taking the position at trial that the [taxpayer] received dividends, rather than…loans.”

She also stated that “it will be up to the presiding judge to determine the weight to be given to the Foreign Judgments when ruling on the correctness or incorrectness of the assessments being appealed.”

Neal Armstrong. Summary of Canadian Forest Navigation Co. Ltd. v. The Queen, 2016 TCC 43 under General Concepts – Rectification.