Published by the Tax Group
McCarthy Tétrault FRANÇAIS VOL.4,
Tax Update (Volume 4, Issue 3)

GlaxoSmithKline: Something for Everyone
On October 18, 2012, the Supreme Court of Canada (SCC) released its long awaited decision in Canada v. GlaxoSmithKline Inc., the first transfer pricing appeal heard by the SCC.

In dismissing the Canada Revenue Agency’s appeal, the unanimous decision by Justice Rothstein not only provided a strong win for taxpayers, but the Court also provided considerable guidance on transfer pricing principles generally. While Glaxo won the case, the SCC sent the appeal back to the Tax Court for further consideration of the transfer pricing and added to the issues to be considered the question whether additional withholding tax should have been paid.


Budget 2012 Legislation – More Revisions to Foreign Affiliate "Dumping" and Shareholders Loan Rules
On October 15, 2012, the Minister of Finance (Canada) tabled a Notice of Ways and Means Motion in the House of Commons to implement certain measures from the March 29, 2012 Federal budget that were amended in draft legislation released on August 14, 2012 (August Proposals). Bill C-45 received first reading in the House of Commons, as Bill C-45, on October 18, 2012 (Bill C-45).

Bill C-45 is substantially the same as the August Proposals with respect to the thin capitalization and partnership "bump" proposals, but contains further significant changes to the foreign affiliate "dumping" and non-resident shareholder loan rules. These changes are generally favourable, reflecting in part submissions that had been made to the Department of Finance by tax organizations and interested parties.