Tax Treaty Case Law around the Globe 2017

S. 379Canada: Judicial Review of the Canada Revenue Agency’s Response in a Mutual Agreement Procedure under the Canada-United States Tax Treaty

David G. Duff

1. S. 380Introduction

Where a taxpayer considers that the actions of one or more contracting states results or will result in taxation not in accordance with a tax treaty, the mutual agreement procedure (MAP) in article 25 of the OECD Model may provide an alternative remedy to domestic law, operating “irrespective of the domestic law” of the contracting states. However, since this process only requires the competent authority of the taxpayer’s state of residence to “endeavour” to resolve the case by mutual agreement with the competent authority of the other contracting state, and only requires it to do so “if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution,” a taxpayer’s rights under the MAP are limited and contingent. For this reason, it is not unusual for taxpayers to seek judicial review of a competent authority’s conduct where the competent authority does not resolve an issue to the taxpayer’s satisfaction.

In CGI Holdings LLC v. Minister of National Revenue, the taxpayer sough...