Quebecor will once again find itself before federal justice to defend a tax avoidance operation which earned it more than $30 million. Ottawa prosecutors are appealing a decision by the Tax Court of Canada that upheld a $96 million capital loss claimed in 2007 and eliminated an equivalent capital gain attributed to it by the tax authorities.
As part of a trial started in 2018, the telecommunications and media heavyweight recognized that a series of transactions were indeed aimed at tax avoidance. Five of them took place on the same day, December 13, 2005. They consisted of a complex game of rolling and trading shares of Videotron and Abitibi-Consolidated that Quebecor and its subsidiaries owned, then the liquidation of a related company.
On October 3, after 11 years of proceedings, a judge nevertheless concluded that the tax avoidance transaction was “not manifestly abusive”, a sine qua non condition for the General Anti-Avoidance Rule to apply.
In an article from The Press On the decision, two tax professors predicted that Ottawa would appeal the decision. It’s now done.
“The Tax Court of Canada erred in concluding that the avoidance transactions did not result in an abuse of the provisions of the Act,” states the federal government’s motion, filed on November 2.
Quebecor’s lawyers will have to make their arguments known in the coming months.