TORONTO — A lawyer for Loblaw Companies Ltd. told a Toronto court today there is no evidence to back the Canada Revenue Agency’s allegations that its Barbadian banking subsidiary was misused for tax avoidance.
Loblaw’s lawyer Al Meghji said in his closing arguments at the Tax Court of Canada that Barbados-based Glenhuron Bank is viewed as a bank under Barbadian law, and should qualify for a tax exemption under Canadian law.
Department of Justice lawyers had argued during the trial, which began in April, that Loblaw Financial Holdings took steps to make Glenhuron Bank appear to be a foreign bank in order to avoid paying tax.
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Government lawyers had argued that the Barbados-based entity did not qualify because, among other things, it mainly invested the grocery giants’ own funds and did not conduct business with arms-length entities.
Meghji today told Justice Campbell Miller that the majority of Glenhuron’s activities involved arms-length entities, such as swap contracts with large banks, and its banking licence from Barbadian authorities is further evidence that it fits the profile of a bank.
The dispute centres on the federal government’s reassessments of Loblaw’s subsidiary for several tax years dating as far back as 2001, and could cost the company as much as $437 million according to its latest quarterly report.