Published On: Wed, Jan 17th, 2018

Loblaw, CRA face off in court in $404-million dispute over tax avoidance allegations

Loblaw Companies Ltd. and the Canada Revenue Agency faced off in a Toronto court today, the latest in an ongoing battle involving allegations that the grocery giant’s Barbadian banking subsidiary was misused for tax avoidance.

The case involving Barbados-based Glenhuron Bank Ltd. was the focus of the Tax Court of Canada hearing, which was largely procedural, ahead of a trial due to start on April 23.

The dispute, which began in 2015 after Loblaw Financial Holdings filed an appeal, could cost the grocery giant as much as $ 404 million including interest and penalties, according to its latest quarterly report.

The CRA alleges in court filings that Loblaw Financial Holdings took steps to have Glenhuron appear to be a foreign bank in Barbados in order to circumvent the rules.

The federal government reassessed Loblaw’s subsidiary for several taxation years as far back as 2001, and concluded that it should pay taxes on $ 473 million of Glenhuron’s income, filings show.

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Loblaw, CRA face off in court in $404-million dispute over tax avoidance allegations