Cases
Singapore Telecom Australia Investments Pty Ltd v Commissioner of Taxation, [2024] FCAFC 29
The taxpayer (“STAI”) - a wholly-owned Australian subsidiary of a Singapore public company (Singapore Telecommunications Limited, or...
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| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) | arm’s length interest could be capitalized but not made contingent on cash flow of borrower, and should reflect a parent guarantee without a guarantee fee | 569 |
Re Nortel Networks Corp., 2014 ONSC 6973
In January 2009, Nortel Networks Corporation ("NNC"), which was the publicly-traded Canadian parent filed for protection under the CCAA, various...
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| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) | provision, under multinational agreement for residual profit split method, for unilateral bearing of restructuring costs, represented appropriate ex ante risk allocation | 204 |
Specialty Manufacturing Ltd. v. R., 99 DTC 5222, [1999] 3 CTC 82 (FCA)
McDonald J.A. found that the capitalization of the taxpayer by non-resident related shareholders with close to 100% debt financing meant that the...
See Also
BlackRock HoldCo 5, LLC v Commissioners for His Majesty's Revenue and Customs, [2024] EWCA Civ 330
The structure for the acquisition by the BlackRock group of the U.S. target (“BGI”) entailed a BlackRock LLC (“LLC4”) lending US$4...
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| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) - Paragraph 247(2)(b) | 3rd-party covenants imputed in a transfer-pricing comparison of a cross-border inter-affiliate loan without them | 522 |
Singapore Telecom Australia Investments Pty Ltd v Commissioner of Taxation, [2021] FCA 1597, aff'd [2024] FCAFC 29
A Singapore-resident company (“SAI”) transferred the shares of a recently-acquired Australian telecom company (“SOPL”) to an Australian...
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| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) - Paragraph 247(2)(a) | arm’s length parties would not have agreed to a loan having a significant participation feature (but accepts a gross-up as commercial) | 712 |
Chevron Australia Holdings Pty Ltd v Commissioner of Taxation, [2017] FCAFC 62
The U.S. subsidiary (“CFC”) of an Australian company (“CAHPL”) in the Chevron multinational group borrowed in the U.S. commercial paper...
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| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) | cross-border loan made on arm’s length terms would have benefited from a parent guarantee or other security | 675 |
| Tax Topics - Statutory Interpretation - Retroactivity/Retrospectivity | retroactive tax was constitutional if it could be judicially challenged based on the facts | 476 |
Sifto Canada Corp. v. The Queen, 2017 TCC 37
As a result of disclosures made by the taxpayer (“Sifto”) under the voluntary disclosure program, CRA reassessed Sifto’s returns for 2002 to...
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| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) | TNMN method was reasonable | 211 |
| Tax Topics - Income Tax Act - Section 115.1 - Subsection 115.1(1) | 115.1 not germane to subsequent inconsistent CRA assessment | 201 |
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(1) | MAP agreement concurred in by taxpayer was binding on the Minister as it was not “indefensible” | 265 |
McKesson Canada Corporation v. The Queen, 2014 DTC 1040 [at 2723], 2013 TCC 404
FCA appeal settled.
The taxpayer sold receivables to its Luxembourg parent (MIH) at over twice the discount which could be supported under s....
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| Tax Topics - General Concepts - Evidence | expert reports without testimony | 56 |
| Tax Topics - General Concepts - Purpose/Intention | tax purpose v. commercial result | 92 |
| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) | terms adjusted within framework of transaction chosen by taxpayer | 928 |
| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(4) | advocacy 3rd-party report not read by taxpayer | 163 |
Teletech Canada, Inc. v. Canada (National Revenue), 2013 DTC 5110 [at 6090], 2013 FC 572
After the taxpayer's U.S. parent (TeleTech US) determined that it had undercharged the taxpayer for administrative services provided in 2000-2002,...
Alberta Printed Circuits Ltd. v. The Queen, 2011 DTC 1177 [at 967], 2011 TCC 232
Pizzitelli J. found (at [paras. 102-103) that the limitation periods in Articles IX(3) and XXVII(3) of the Canada-Barbados Tax Treaty did not...
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| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) | internal CUP applied over TNMM | 197 |
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | common interests and implementation | 352 |
| Tax Topics - Treaties - Income Tax Conventions - Article 26 | 96 |
Administrative Policy
7 July 2022 Internal T.I. 2021-0893791I7 - Interest expense on subordinated income instrument
In the early 1980s, Holdco received a ruling as to the deductibility (subject to ITA s. 18(4)) of its interest expense on a 40-year U.S. $15...
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| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) | s. 69(2) ruling continued to apply post-s. 247(2)/ OECD principles re interest on related-party debt | 249 |
13 October 2023 Internal T.I. 2019-0819351I7 - Barbados Treaty Limitation Period
Transactions between a corporation resident in Canada (“Canco”) and its wholly-owned subsidiary resident in Barbados (“BarbadosCo”) were...
15 September 2020 IFA Roundtable Q. 5, 2020-0853401C6 - IFA 2020 Q5: TPM-17 and COVID-19
TPM-17 provides that the Canadian taxpayer’s cost base should not be reduced by government assistance unless there is reliable evidence that...
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| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) - Paragraph 247(2)(a) | Canadian governmental COVID assistance likely will not reduce cost under cost-plus transfer-pricing methods | 167 |
Articles
Christopher J. Montes, Siobhan A.M. Goguen, "Recharacterization of Transactions Under Section 247: Still an Exceptional Approach", 2018 Conference Report (Canadian Tax Foundation), 21:1-25
- The approach taken in the 2017 OECD Guidelines of “accurately delineating” a transaction is, in fact, an approach of departing from the...
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| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) | 910 |
Matias Milet, Jennifer Horton, "The Canada Revenue Agency’s Interpretation of the 2017 OECD Transfer Pricing Guidelines", International Tax (Wolters Kluwer CCH), No. 103, December 2018, p.10
The OECD 2017 Transfer Pricing Guidelines reoriented transfer pricing towards the concept of value creation, namely, of ensuring that profits are...
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| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) | 649 |
Mateusz M. Krauze, "Impact of Cloud Computing on Permanent Establishments Under the OECD Model Tax Convention", Tax Management International Journal, Vol. 44, No. 3, March 13, 2015, p. 131.
Categories of Cloud-based services (p.132)
The models for providing cloud-based services have traditionally been divided into three categories:...
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| Tax Topics - Treaties - Income Tax Conventions - Article 5 | 281 |
Derek G. Alty, Brian M. Studniberg, "The Corporate Capital Structure: Thin Capitalization and the ‘Recharacterization' Rules in Paragraphs 247(2)(b) and (d)", Canadian Tax Journal, (2014) 62:4, 1159-1202.
Per OECD, Art. 9 permits recharacterizing debt where it is equity in economic substance (pp. 11176-7)
[T]he [Canada Revenue Agency] information...
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| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) | 892 |
Robert Couzin, "Policy Forum: The End of Transfer Pricing?", Canadian Tax Journal, (2013) 61:1, 159-78, at 172
After noting (at p. 171) that "the arm's length principle...tries to hypothesize its way around the economic integration of the firm," he...
Veronika Solilová, Marlies Steindl, "Tax Treaty Policy on Article 9 of the OECD Model Scrutinized", OECD, Bulletin for International Taxation, March 2013, p. 128, at 130
In the course of reviewing the background to Article 9(2) of the OECD Model Convention, they stated:
…According to Working Party 7, article 9 of...
Michael C. Durst, "OECD's Fight Against Income Shifting - and for Its Global Role", Viewpoints, Tax Notes International, 3 December 2012, p. 933
In a further discussion of the OECD Discussion Draft on Transfer Pricing for Intangibles, he notes (at p. 935) that "transfer pricing rules —...
Michael C. Durst, "'Risk' and the OECD Discussion Draft on Transfer Pricing", Viewpoints, Tax Notes International, 15 October 2012, p. 285
After noting (at p. 285) that "under properly constructed transfer pricing rules...controlled entities should be treated as bearing the same risks...
David R. Jarczyk, "Info Services Firm Comments on OECD Draft Transfer Pricing Guidelines", Tax Notes International, 24 September 2012, p. 1221
Adresses the following "myths" respecting the application of the CUP and CUT methods to intangibles: the CUP method cannot be applied because...
Michael C. Durst, "The OECD Discussion Draft on Safe Harbors – And Next Steps", Viewpoints, Tax Notes International, 13 August 2012, p. 647
Respecting the discussion draft of the OECD's Working Party 6 recommending that the OECD adopt changes to its transfer pricing guidelines to...
Michael C. Durst, "The OECD Discussion Draft on Transfer Pricing for Intangibles", Viewpoints, Tax Notes International, 30 July 2012, p. 447:
After quoting (at p. 448) the statement in the OECD discussion draft on transfer pricing for intangibles that "neither legal ownership, nor the...
CRA Policy
3 June 2013 Memorandum 2012-0468131I7: The Rulings Directorate concluded that returns paid by the Canadian taxpayer (‘Canco") on "Contracts"...
OECD
Working Party No. 6 of the OECD Committee on Fiscal Affairs, Discussion Draft: Proposed Revision of the Section on Safe Harbours in Chapter IV of...