Agences Kyoto – Court of Quebcc finds that a written contract or resolutions were unnecessary for the deductibility of inter-company management fees

Regarding the denial by the ARQ of the deduction of management fees paid by the taxpayer (AK) to its wholly-owning parent (GAK), Richard JCQ stated:

Despite the absence of a written contract, resolution or other documentation, [an AK/GAK director] convinced the Court that numerous acts of management were performed by GAK for the benefit of AK, notably in the negotiation of financing, acquisition opportunities, the determination of rents and the payment of life insurance policies for its directors, of which GAK is the beneficiary.

Neal Armstrong. Summary of Agences Kyoto ltée v. Agence du revenu du Québec, 2023 QCCQ 2921 under s. 18(1)(a) – income -producing purpose.