‘No avenue for effective judicial oversight’ – International Tax Review ‘No avenue for effective judicial oversight’ – International Tax Review

A recent Tax Court of Canada transfer pricing (TP) decision underlines frustrations that taxpayers may face because of the split legal jurisdiction over TP adjustments, says partner Amanda Heale in an interview with International Tax Review.

The case involved Canada’s Minister of National Revenue declining a request from petrochemical company MEGlobal Canada for a downward TP adjustment, pursuant to subsection 247(10) of Canada’s Income Tax Act. According to this legislation, adjustments cannot be made unless Canada’s Minister of National Revenue, the parliamentary figure who oversees Canada’s revenue agency, approves it.

MEGlobal Canada brought an application for judicial review to Canada’s Federal Court. However, the Tax Court of Canada quashed the appeal, as it ruled it did not have the jurisdiction to overrule the minister’s authority.

Amanda says it was unfortunate MEGlobal Canada was left with no avenue for effective judicial oversight of the minister’s decision to deny it a downward TP adjustment. She says the decision also emphasizes the need for legislative reform.

“In the meantime, the takeaway for taxpayers is to consider filing a waiver of the applicable reassessment period whenever a downward adjustment is sought to ensure that judicial review in the Federal Court offers a pathway to relief,” says Amanda.

Read the full article by author Sam Sholli available to subscribers or on a 30-day trial.