The Tax Court of Canada has dismissed a request from the Canadian Revenue Agency (CRA) to require companies to supply additional privileged evidence on transfer pricing transactions. This is seen in Canada as a benchmark ruling. This is the latest appeal by the CRA to the Tax Court to compel disclosure of privileged inter-company information. This case, under associate chief judge Gerald Rip, involves the General Electric Company and guarantee fees which it charged to its Canadian subsidiary.  The ruling was given on April 30. (CRA head office, pictured)

After 1988, General Electric guaranteed all payments covering debt securities to GE Capital Canada. In 1995, the US parent began to charge a 1% a year fee for its financial guarantees. In reviewing GE Capital Canada’s tax returns for the years 1996 to 2000, the CRA reassessed the tax liability. It imposed an additional charge of C$136 million ($134 million). It refused a claim by GE Capital Canada for deductions of these guarantee fees in its tax payments. At the time it was Canada’s largest ever transfer pricing adjustment.