The Resource General Electric Capital Canada Inc v Her Majesty the Queen : 2009 TCC 563

General Electric Capital Canada Inc v Her Majesty the Queen : 2009 TCC 563

Label
General Electric Capital Canada Inc v Her Majesty the Queen : 2009 TCC 563
Title
General Electric Capital Canada Inc v Her Majesty the Queen : 2009 TCC 563
Creator
Contributor
Subject
Language
eng
Summary
Judgment by the Tax Court of Canada, Toronto, dated 4 December 2009. The taxpayer was a subsidiary of a US company GECUS. Both were in the business of providing finance and loans with money borrowed on capital markets. GECUS determined the terms of the taxpayer's debt issues and provided the taxpayer with a guarantee. The taxpayer's debt issues were rated AAA by major ratings agencies, the benchmark being the rating of GECUS. GECUS provided this guarantee for free but in 1996 decided to charge a fee of one per cent of the capital guaranteed per year. The taxpayer deducted this as a business expense but the Revenue disallowed this and assessed withholding tax on the payments, arguing that the taxpayer's debt would have been rated AAA without the guarantee because of the implicit support of GECUS and the payments should be treated as dividends. The taxpayer argued that the fee was at the level which would have been set by two companies at arm's length. It was held that an arm's length price was determined by negotiation in the market, and that an arm's length party would not contract to pay for a service that held no value. As the evidence did not show that the unguaranteed debt of the taxpayer would have been rated close to AAA, the guarantee was of value to the taxpayer and worth about 1.83 per cent of the taxpayer's capital value
Citation source
In: International tax law reports. - London. - Vol. 12 (2010),
http://bibfra.me/vocab/relation/comm
QPVQdd_4hw8
http://library.link/vocab/creatorName
Ward, D.A
Geographic coverage
North America
Language note
English
http://library.link/vocab/relatedWorkOrContributorName
Baker, P
http://library.link/vocab/subjectName
  • case law
  • corporate income tax
  • transfer pricing
  • guarantee fee
  • arm's length principle
Label
General Electric Capital Canada Inc v Her Majesty the Queen : 2009 TCC 563
Instantiates
Publication
Label
General Electric Capital Canada Inc v Her Majesty the Queen : 2009 TCC 563
Publication

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