Besitzen Sie diesen Inhalt bereits,
melden Sie sich an.
oder schalten Sie Ihr Produkt zur digitalen Nutzung frei.
The Canadian Tax Court Again Rules in Favor of the Legal Substance of Arrangements
Observations of the AgraCity Case and its Impacts
In a recently decided case, the Tax Court of Canada ruled in favour of the Canadian company AgraCity Ltd. and its related company. Mirna S. Screpante outlines the case as well as its impacts on the concepts of functional analysis, economic substance and accurate delineation of the 2017 OECD TPG.
1. Introduction
The Tax Court of Canada (hereinafter: TCC) ruled in favor of the Canadian company AgraCity Ltd. (hereinafter: AgraCity) and a related company, Saskatchewan Ltd. (hereinafter: SaskCo), in a dispute with the Canadian Revenue Agency (hereinafter: CRA) over the taxation of profits from the sale of herbicide conducted through a Barbados subsidiary, NewAgco Barbados (hereinafter: NewAgco). The CRA reassessed AgraCity on the basis that NewAgco’s profits should have been realized by AgraCity. The reassessment had been made not relying upon the general anti-avoidance rule (hereinafter: GAAR) set out in section 245 of the Canadian Income Tax Act (hereinafter: ITA) but using the purpose-oriented transfer pricing “recharacterization” provisions of section 247(2)(b) and (d) ITA set out as a specific anti-avoidance rule that in part uses somewhat similar concepts based on the argument that ...