Loblaw wins case over offshore tax dispute in Supreme Court
Global News
In a 7-0 ruling Friday, the tope court says Canadian provisions at issue in the case did not apply to the company, meaning tax on its income was not payable in Canada.
Loblaw Financial Holdings should not have to pay Canadian taxes on income from a subsidiary the company ran in Barbados, the Supreme Court of Canada has ruled.
In a 7-0 decision Friday, the top court said Canadian provisions at issue in the case do not apply to the subsidiary, Glenhuron Bank, meaning tax on its income is not payable in Canada.
Loblaw Financial, part of a larger group that includes the well-known grocery retailer, incorporated the subsidiary in 1992. Barbados’ central bank issued a licence for it to operate as an offshore bank.
In 2013, Glenhuron was dissolved, and its assets were liquidated to help Loblaw buy Shoppers Drug Mart.
Loblaw Financial and affiliated companies made capital investments in Glenhuron, which engaged in corporate banking, between 1992 and 2000.
For several taxation years from 2001 and 2010, Loblaw Financial did not include income earned by Glenhuron in its Canadian tax returns as foreign accrual property income, known as FAPI.
The federal revenue minister issued reassessments to Loblaw Financial that required it to pay tax on Glenhuron’s income on the grounds it fell under the provisions.
The federal Tax Court agreed with the minister in 2018 that Glenhuron’s income did not qualify for an exclusion afforded to foreign banks.