(Ottawa) The Canadian Supreme Court has ruled in favor of Lobla Financial Holdings in a case between Canadian tax authorities claiming excessive amounts of income attributed to a subsidiary of a company in Barbados.
In a unanimous decision of seven judges, the court ruled that the articles initiated by the federal government in the case of the Glenhuron subsidiary were not applicable, meaning that its earnings in Canada would not be taxable.
As can be read in the resolution, National Revenue Minister Diane LeBautilier demanded that donations be made to Loeb for what it considers to be “foreign income collected from assets (REATB)” by its subsidiary Glennhuron. . The claimed contributions were extended from 2001 to 2005 as well as from 2008 and 2010 for several years.
The tax court sided with the minister in 2018, arguing that Glennhuron did not benefit from the exemption rules for financial institutions.
Then the court said “although Glennhuran is a controlled foreign bank […], She mainly ran her business with people she could not get her hands on ”, which disqualified her from the criteria provided for the exemption.
In its unanimous decision, the Supreme Court ruled that “although Glenzhouran’s investment activities are primarily carried out by persons beyond its control” and are excluded from the oversight review of capital donations and the organization “and are therefore eligible for exemption from financial institutions provided by law.