From: brewnoser2@gmail.com   
      
       
   First they get caught price-fixing on bread products, now they're being found   
   out for tax evasion.     
      
   Some big bread coming back into Canadian tax coffers if this $45-billion   
   enterprise is the first to be convicted in the off-shore evaders' search.     
      
   (PS:  Apply online for the $25 rebate that they're offering to limit their   
   liability in court - you may have shopped at one of their grocery stores or at   
   Shoppers Drugs for the bread.  If you don't need the money yourself, give the   
   voucher to your local    
   food bank.)   
   _______________________   
   CBC News - 5 hrs ago   
      
   Loblaws in $400M tax fight with CRA over claims it set up bogus offshore bank   
   Barbados transactions were designed to 'circumvent' the Income Tax Act,   
   government alleges   
      
      
   A senior judge warned Loblaws and the federal government this morning that she   
   would not look kindly on any further procedural delays in a $400-million   
   battle the two sides are waging in Tax Court.   
      
   Loblaws and the government were in a Toronto courtroom in one of the biggest   
   offshore corporate tax-avoidance cases in the country, with authorities   
   alleging the grocery conglomerate set up a bogus foreign bank to avoid tax on   
   hundreds of millions of    
   dollars in investment income.   
      
   The case has been brewing since 2015 and is slated for a full trial in April   
   — more than a year after the originally scheduled start date, due to a   
   series of procedural squabbles.   
      
   "I do not want to have to adjourn this again," Associate Chief Justice Lucie   
   Lamarre cautioned both sides on Wednesday.   
      
   At stake for Loblaws is a huge potential tax bill: $404 million, including   
   interest, penalties and provincial income tax, according to documents related   
   to the case.   
      
   "These are all big numbers," said Peter Baek, a Toronto tax litigator and   
   former senior CRA auditor experienced with offshore tax rules.     
      
   Loblaws is facing scrutiny on other fronts as well, including its recent   
   admission to a price-fixing scheme on the sale of bread in Canada, as well as   
   revelations in the Paradise Papers exposing the company's use of offshore   
   havens to shield profits.     
      
   'Circumvent the rules'   
      
   The tax battle has its roots back in 1992, when Loblaws incorporated a regular   
   offshore company in Barbados initially called just Loblaws Inc.  A little over   
   a year later, the subsidiary changed its name to Glenhuron Bank Ltd. and   
   obtained a Barbados    
   banking licence.   
      
   Loblaws funded Glenhuron Bank largely with money from other arms of its global   
   grocery business.  Glenhuron Bank then used the money to invest in financial   
   derivatives including interest and currency swaps, earning hundreds of   
   millions of dollars in    
   income.   
      
   Normally, those profits could legally avoid income tax in Canada under an   
   exemption for the investment earnings of Canadian-owned foreign banks.   
   The name of Loblaws subsidiary Glenhuron Bank Ltd. is seen in 2010 listed on   
   the directory at the CGI Tower in Barbados. The CRA alleges the company's   
   actual activities 'did not constitute banking.'  (CaribDigita/Wikimedia   
   Commons)   
      
   But not so fast, auditors for the Canada Revenue Agency said as they   
   reassessed the 2001 to 2010 tax filings of Glenhuron Bank's Canadian parent,   
   another Loblaws subsidiary.  They determined Glenhuron Bank, known as GBL,   
   shouldn't qualify for the    
   exception.   
      
   "GBL's activities did not constitute banking or a banking business," the   
   government alleges in its court filings.  "GBL was not in the business of   
   providing financial services."   
      
   The filings claim Glenhuron Bank got its seed money from "the diversion" of   
   more than $470 million US from other Loblaws entities, in the Netherlands and   
   in Delaware.  If that money had stayed in the hands of those entities, any   
   earnings would have been    
   taxed, the government claims.   
      
   What's more, the government alleges Loblaws deliberately swapped the name of   
   its Barbados entity from Loblaws Inc. to Glenhuron Bank, and then applied for   
   a banking licence, solely "to obtain tax benefits."   
      
   "The purposes of the series of transactions... were to have GBL appear to be a   
   foreign bank in Barbados in order to circumvent" parts of the Income Tax Act,   
   filings state.   
      
   CEO Galen Weston named   
      
   Loblaws denies all those claims, saying Glenhuron Bank legitimately qualifies   
   as a regulated foreign bank under the Income Tax Act and the Bank Act.   
      
   "Glenhuron Bank was a regulated foreign bank that earned income outside of   
   Canada.  Canadian tax policy and law says that the income of regulated foreign   
   banks is not taxable in Canada," the company said in a statement Tuesday   
   evening.  "Therefore, our    
   position is that Glenhuron Bank's income was not taxable in Canada.  The CRA   
   disagrees."   
      
   The case is set for a three-week trial this spring, after more than a year of   
   procedural wrangling.   
      
   The government at one point claimed that a vice-president at Loblaws parent   
   company George Weston Ltd. "was unable or unwilling to answer many questions"   
   during pre-trial discovery hearings.  Later, a judge was brought in to referee   
   during one of the    
   discovery sessions — a rare but not entirely unusual step.   
      
   At another point, a judge "express[ed] alarm" during a pre-trial conference at   
   the number of unresolved questions between the government and Loblaws,   
   according to minutes in the court file.   
      
   Finally, in November, the government filed a motion demanding that Loblaws go   
   to the top, to billionaire CEO Galen Weston Jr., to get answers to some of its   
   pre-trial discovery questions about "the purpose for which GBL was established   
   and the activities    
   of GBL during the years at issue."  The government ended up withdrawing its   
   motion after Loblaws provided additional information.   
      
   Tax lawyer Baek said the back and forth is not surprising.   
      
   "I can see how, especially with the amount they're looking at here, there   
   could be lots of procedural fighting."   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)