Lessons from the GE Capital Canada case
March 01, 2010
With increased audit activity and recent tax litigation in Canada, determining the arm’s-length pricing of guarantees continues to be a difficult transfer pricing issue and risk for multinationals. Gordon Hands of CUFTanalytics discusses the issues raised in the GE Capital Canada’s guarantee fee transaction litigation.
In December 2009, the Tax Court of Canada gave its decision on the GE Capital Canada case based on expert witness testimony and final closing arguments from legal counsel for the Canada Revenue Agency (CRA) and from GE Capital Canada. The decision has important implications and has led to a prolonged discussion about the major issues facing taxpayers in determining an arm’s-length guarantee fee.
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