Navigating Cross-Border Tax Controversy

The Canada Revenue Agency (“CRA”) has been steadily increasing the intensity of audits targeting cross-border investment and business activity.

Your Tax Controversy/Tax Litigation team at Aird & Berlis has deep experience navigating all types of disputes that can arise in this area, including:

• Transfer pricing. We are currently acting on complex transfer pricing disputes, including a Tax Court appeal involving a public multinational pre-acquisition reorganization and a Tax Court appeal involving a cross-border hybrid financing structure.
• Transfer pricing – downward adjustments. Our lawyers successfully resolved a dispute involving the denial of over $400M of downward transfer pricing adjustments under subsection 247(10) of the Income Tax Act via judicial review in Federal Court.
• Foreign reporting and cross-border compliance. We have advised on complex voluntary disclosures involving foreign reporting obligations (T1134 and T1135) and other cross-border compliance matters, including issues relating to the upstream loan rules, foreign exchange gains/losses, cash pooling arrangements and corporate migration.
• Collections and security for payment. It is not always necessary to pay cash or provide a bank letter of credit. We have successfully negotiated alternative/bespoke security arrangements involving non-standard forms of security, effectively postponed CRA collection action, managed CRA collection efforts in circumstances of financial difficulty and debt restructuring, and successfully challenged CRA refusals to accept security in Federal Court.
• Interest relief. We have successfully challenged the CRA’s refusal to provide adequate interest relief due to delays in resolving double tax disputes and have assisted numerous clients with applications for taxpayer relief and other discretionary remedies.
• Competent authority disputes. We have successfully challenged the conduct of CRA officials under the Mutual Agreement Procedure in Canada’s income tax treaties via judicial review in Federal Court.
• Beneficial ownership, tax residence and GAAR. We have acted on leading cases involving beneficial ownership under Canada’s treaties and in disputes regarding tax residence. We recently acted in a Tax Court appeal regarding beneficial ownership under the Canada-Luxembourg tax treaty and the application of the General Anti-Avoidance Rule in relation to dividends paid by a Canadian public company to non-resident shareholders.
• Advance Pricing Agreement (“APA”) disputes. We have successfully challenged CRA decisions to refuse access to the APA program via judicial review in Federal Court.
• Character of cross-border distributions and Canadian withholding tax. We successfully resolved a Tax Court appeal involving the character of cross-border distributions where the CRA had imposed non-resident withholding tax, interest and penalties of more than $130M and regularly advise on issues involving liability for withholding tax.
• Cross-border audits and exchange of information. We have extensive experience managing cross-border audits, including the successful challenge of foreign-based information requirements via judicial review in Federal Court.

For more information about our expertise, visit our Tax Controversy/Tax Litigation web page.