Canadian Tax Haiku of the Week:

Transfer pricing

Judges need justice too in

McKesson Canada

On December 20, 2013, the Tax Court of Canada (“Tax Court”) released an eagerly anticipated 105-page verdict involving the latest Canadian transfer pricing trial, McKesson Canada Corporation v. The Queen (the “Tax Court Decision”).[1] The trial lasted 32 days over a period of five months from October 17, 2011 to February 3, 2012. But this judgement was only the beginning.

The Tax Court Decision, heard by Mr. Justice Patrick Boyle, involved transfer pricing adjustments under section 247 of the Income Tax Act (the “Act”)[2] and the limitation period in Article 9(3) of the Canada-Luxembourg Tax Convention (the “Convention”). By its very nature transfer pricing is an artificial and contrived concept. These rules are set down by the OECD Transfer Pricing Guidelines (the “OECD Guidelines”),[3] which have been agreed to by the major trading nations. Specifically, for tax purposes, the terms and conditions on which Canadian taxpayers and non-arm’s length non-residents transact are those expected of arm’s length parties.

Recently, there has been an increased focus on how these rules have been abused by some multinational entities to move revenue and/or expenses from their subsidiaries in higher-tax jurisdictions to their subsidiaries in lower-tax countries.[4] However, the OECD Guidelines work kind of like Winston Churchill’s definition of democracy as “the absolute worst system, except for all of the others”. If it were not for these rules, every country would have their own system, requiring all profits flowing to their own domestic tax net. In an interdependent world where a product can have inputs from multiple countries at each level of its multi-stage production process, this would be unmanageable.

Under Canadian tax law, transactions between Canadian entities and foreign related parties that do not reflect arm’s length terms and prices can either be adjusted to reflect such prices, or if the terms of the transaction are entirely inappropriate, the transaction can be “re-characterized”, or altered to reflect the economic and business reality of the transaction by the Tax Court.[5]

Three major law firms co-represented McKesson Canada in a motion before the Federal Court of Appeal (the “Court of Appeal” or “FCA”). Across from them were three lawyers from the Department of Justice (the “Respondent” or “Crown”). This heavy artillery signaled the significance of this matter, which not only dealt with novel tax issues, but also with controversial pleadings and a dramatic and public response by a Tax Court judge.

In our view, faced with an adverse ruling in the Tax Court, McKesson Canada went a little too far with their advocacy, and was deliberately trying to “confuse” the Court of Appeal. The old saying goes, when the facts are against you, argue the law; if the law is against you, argue the facts. And if both are against you, (as they were by the time the case reached the Court of Appeal), then misinterpret the facts and law and then whine that the judge was biased. Actually we made up that last part, but it reflects what happened in this case. In response to these tactics Justice Boyle, who heard this case at the Tax Court, took unique, drastic steps to prevent such shenanigans, ensuring that the tax bar has been mesmerized by the “McKesson Saga”.

Tax Court of Canada Decision
In the Tax Court Decision, Justice Boyle decided on whether paragraph 247(2)(a) of the Act applied to a financing transaction (the factoring of accounts receivables) between McKesson Canada to MIH, a non-resident affiliate. At issue was whether the agreed-upon discount rate for factoring accounts receivable (2.206%) differed from the discount rate to which the parties would have agreed had they been dealing with one another at arm’s length.

The case also involved the secondary issue of McKesson Canada’s liability under the Act for its failure to withhold and remit to the Canada Revenue Agency (“CRA”) an amount equal to the Part XIII non-resident withholding tax from the disallowed amounts paid by it to its non-resident parent.

Justice Boyle upheld the CRA’s transfer price adjustments that had reduced the discount rate paid under a receivables sales agreement between McKesson Canada and MIH, from 2.206% to 1.0127%. The Tax Court also upheld the assessment of withholding tax on a deemed dividend that arose in a secondary adjustment resulting from the lower discount rate.

McKesson Canada is the principal Canadian operating company in the McKesson group of companies (“McKesson Group”) owned by the U.S. multinational McKesson Corporation. The core business of the McKesson Group is the wholesale distribution of “over-the-counter” and prescription pharmaceutical medicine products (this accounts for 97% of its revenues). Its other related business is that of hospital software technology.[6]

In 2002, McKesson Canada and MIH, its Luxembourg parent company, entered into a Receivables Sales Agreement (the “RSA”) and a Servicing Agreement. Under the RSA, MIH agreed to purchase all of McKesson Canada’s eligible receivables as at that date (approximately $460,000,000) at a discount and committed to purchase all eligible receivables daily as they arose for the next five years unless earlier terminated, subject to a $900,000,000 cap.[7] The price to be paid for the receivables was at a 2.206% discount to their face amount.[8] Note that 99.96% of McKesson Canada’s receivables proved to be good and collectable.[9]

The CRA reassessed McKesson Canada’s 2003 taxation year on the basis that if the RSA had been made between arm’s length parties the Discount Rate would have been 1.0127% and made a transfer pricing adjustment under section 247 of the Act of $26,610,000.[10]

Part I Assessment
McKesson Canada argued that the discount rate agreed upon by the parties was appropriate for an arm’s length transaction given the amount of risk that was being transferred from the vendor to the purchaser of the accounts receivable.

Part XIII Assessment
The secondary issue involved the shareholder benefit and withholding tax on the deemed dividend which resulted from the excess amount paid by McKesson Canada to MIH. Justice Boyle had to determine whether McKesson Canada conferred a benefit on its controlling shareholder, MIH, under subsection 15(1) of the Act through the transfer of receivables at an overstated Discount Rate which resulted in it having given away some of its assets to its parent/shareholder[11] and, therefore, whether McKesson Canada should be deemed to have paid a dividend to McKesson International under paragraph 214(3)(a) of the Act.[12]

McKesson Canada argued that the Part XIII assessment is barred by virtue of the Treaty, which applied since MIH is a company existing under the laws of Luxembourg. As Article 9(3) of the Treaty includes a five year time limit for changes by Canada to the income of a taxpayer, the time for the adjustment expired on March 29, 2008 (before the art XIII assessment was mailed)[13].

Justice Boyle held that the five-year time limit in Article 9(3) did not apply because Article 9(3) dealt only with Article 9(1) of the Treaty in respect of transfer pricing adjustments and not deemed dividends. And also because there was no evidence that MIH was subject to any “extra tax” in Luxembourg. Therefore, the withholding tax assessed against McKesson Canada was not subject to the limitation period in the Treaty.

On January 10, 2014, McKesson Canada appealed the Tax Court Decision to the Federal Court of Appeal (the “Appeal”, Federal Court of Appeal File Nos. A-48-14 and A-49-14). At the same time, Justice Boyle was still involved with several outstanding post-trial matters, including costs submissions and confidentiality matters.

McKesson Canada followed the usual process of appealing a judgement from the Tax Court, first filing a notice of appeal on January 10, 2014 and then filing a memorandum of fact and law (the “Factum”) on June 11, 2014. McKesson Canada didn’t pull any punches, stating that Justice Boyle “discarded the case pleaded and argued by the parties and decided the appeal on grounds that were not raised in the pleadings or argued at trial, but made their first appearance in the trial judge’s reasons well after the trial was over.”[14] Specifically, the Factum alleged that Justice Boyle’s decision was based on evidence and arguments that were (i) not in evidence, (ii) never put to counsel for argument and/or (iii) in conflict with other statements in Tax Court Decision.[15] Among other things, the Factum also alleged that Justice Boyle demonstrated “palpable antipathy” towards the taxpayer, its witnesses and its counsel, referring to one of his statements as “sharp.” [16] Later in the Factum, the Appellant alleged that Justice Boyle’s analysis was “infected by his pejorative and unfair comments”.[17]

In any appeal the appellant will attempt to poke holes into the trial judge’s decision. that is just good advocacy. Also, the Court of Appeal has a tendency to become “confused” by tax cases, and attempted to further confound them when dealing with a case that was already highly complicated, is just good tactics. However, the question is whether the Appellant took things too far in its Factum.

Boyle Strikes Back
At some point Justice Boyle read the Factum and took strong exception to the Appellant’s allegations. Justice Boyle stated that it was not his “habit” to review the factums filed in the Court of Appeal in respect of his decisions. However, this Factum was drawn to his attention by “several prominent Canadian tax lawyers” as well as a “colleague on the Court.”[18] Then, in an unprecedented turn of events, he wrote on his own motion, issuing a 47-page Order (the “Reasons for Recusal” or “Reasons”) recusing himself from any further involvement in the case due to perceived attacks upon his “honour and integrity”.[19]

Justice Boyle stated the purpose of his Reasons was to consider whether a “reasonable person” would believe that he would be able to remain impartial in deciding the remaining issues at the Tax Court and whether the Appellant’s “public challenge” of his impartiality was sufficient to warrant recusing himself.[20] However, only eight out of the 139 paragraphs of the Reasons actually addressed these matters. The rest of the Reasons were essentially a rebuttal of the Appellant’s arguments in its Factum (later, in its Supplementary Factum, the Appellant would compare the content of the Reasons to the Respondent’s factum).

It is clear that Justice Boyle took great issue with the language of the Factum. Justice Boyle held that the Factum alleged that he was “untruthful and deceitful”, stated “clear untruths” about him, and made allegations of his impartiality.[21] Justice Boyle also accused the Appellant’s counsel of intentionally seeking to mislead the Court of Appeal and crossing the line as to what was appropriate.[22]

Justice Boyle began by stating that a “trial judge’s job on the merits ends with the rendering of reasons and judgment. There is rightly no role for the trial judge in the appeal of the trial decision. Counsel on each side in the appellate court is free to make whatever arguments they wish, including claiming or denying support in the record, the use of emphasis and spin, or even trying to argue a case it thinks it can win instead of the case it has. That is all of counsel’s choosing…”[23]

Justice Boyle highlighted three specific sentences in the Factum which he took offense to. He stated that these statements by the Appellant had “no polite qualifiers”[24] and showed no deference to his judgement.

“[t]he Trial Judge did not, in fact, leave this question for another day, as he claims to have done”.[25]
“[t]he Trial Judge, without acknowledging it, has challenged whether the written terms of the Agreement reflected the “real” allocation of risk between MIH and McKesson Canada”[26]
“[t]his is so notwithstanding the Trial Judge’s contention, at paragraph 132 of his Reasons, that “in this case, I do not need to [consider notional continued corporate control] in order to fully dispose of the appeal with respect to the proper transfer pricing adjustment”.[27]
He was not pleased with the Appellant’s tactics in its factum, stating, “maybe that is considered acceptable in professional appellate advocacy.”[28] Justice Boyle felt that the Appellant had chosen to challenge his “truthfulness, honesty and integrity” in order to advance its argument.[29] He took great issue with the Appellant’s “licence to overstate” through the use of absolutes like ‘never’, ‘only’ and ‘any’.[30]

Justice Boyle continued, reviewing in detail the various criticisms levelled against him in the Factum, pointing to various extracts from the trial transcripts to address the Appellant’s claims that his findings lacked evidentiary foundation or had never been the object of argument by counsel.

Justice Boyle concluded by stating that trial judges “should not have to defend their honour and integrity from such inappropriate attacks.”[31]

New Ground for Appeal
Traditionally judges remain silent when their rulings are appealed to a higher court, but not Justice Boyle. His Reasons did not go unnoticed. Some months later, the Appellant moved to amend its Appeal to include a claim for relief based upon these somewhat novel developments.[32]

The Appellant proposed the additional ground of appeal:

“Do the trial judge’s Recusal Reasons compromise the appearance and reality of a fair process in this case such that a new trial is necessary?”
The Appellant submitted that by responding in considerable detail to the Factum, Justice Boyle had “improperly injected himself into the appeal process and has compromised its integrity.”[33] The Appellant viewed the Reasons as an attack on its arguments and counsel,[34] claiming that it now faced two adversaries.[35] The Appellant submitted that Justice Boyle’s “intervention in this appeal was ill-advised and improper” and that, Justice Boyle should have remained “above the fray” and should not have “put himself into the appellate arena”.[36]

The Appellant argued that the recusal reasons were directed at the Court of Appeal and have compromised the fairness of the case as they became part of the record in the case before the Court of Appeal.[37] The Appellant stated that the Reasons were “nothing less than an explicit attempt by the trial judge to insert himself into the appellate process as an advocate against the Appellant and its lawyers.” [38]

The Appellant concluded by requesting that the appeal be allowed and the matter remitted to the Tax Court for a new trial before a different judge. A new trial would give the Appellant “an opportunity to make its case at trial, free of the unfairness that has now tainted this proceeding.”[39]

The Court of Appeal allowed the Appellant’s motion to add a new ground of appeal and to file a supplementary factum.[40] In the Order, Justice Stratas held that the Reasons (i) departed from the norm, (ii) were a new, material development and (iii) have become part of the real issues at stake in the Appeal.[41] Furthermore, Justice Stratas held that it was neither “clear cut nor obvious that the new ground raised by the Appellant would fail”. [42]

In a nutshell, this backfired on Justice Boyle. His Reasons may have incited the exact situation he wanted to avoid, utter confusion and mayhem at the Court of Appeal.

Why is This Important and Why Would We Care?
Justice Boyle clearly made the mistake of taking it personally when the McKesson Canada went after him. He also went way too far in dismembering Appellant’s position and then chopping it up into little pieces and then stamping it into the ground and lighting it on fire, burning it to ashes and then pissing on it to make sure the fire was out, figuratively speaking, of course. Thus, although Justice Boyle “over-did-it”, he over-did-it very well and he absolutely had to over-did-it.

There were, in our view, important and valid big picture judicial policy reasons why he did the right thing. Justice Boyle’s decision to intervene so forcefully was justified as the only possible way for him to draw sufficient attention to the need for changes to the way that Tax Court appeals are handled.

Although the Appellant’s attacks on him were personal, there were echoes of an earlier “Mega-case” in the transfer pricing field, Canada v. GlaxoSmithKline Inc.[43] At the Tax Court, Justice Rip (as he was then)[44] made a reasonable and well-founded decision based on his understanding and through analysis of the facts and law.[45]

Justice Rip found that Glaxo’s Canadian subsidiary should not have to pay a premium price for a drug product from a related Singapore entity, mostly because there were identical generic versions of the product available for much less. Justice Rip did not take the value of the “brand name” attached to the product by Glaxo Canada because, he found as a fact that it was not relevant to the transaction at hand because the Singapore entity did not own the brand; rather Glaxo’s UK based parent owned all the intellectual property involved. Also Justice Rip found as a fact that Glaxo Canada employed an army of representatives who travelled around “incentivizing” doctors to prescribe the much more expensive branded version, rather than the cheap generic. These “incentives” were not of the “set of steak knives” variety either. So, as Justice Rip determined, if the brand were valuable in the circumstances, Glaxo would not have had o “incentivize” the doctors so heavily?

At the Federal Court of Appeal, Glaxo argued that the Tax Court judge did not take all relevant matters into account, including specifically the value of the brand in determining the correct price to be paid to Singapore.[46] …. OK so why does the brand matter if the Singapore company does not own it and it is not really worth very much anyway? The answer is that Glaxo’s counsel “confused” the Federal Court of Appeal because a lower court “not taking into account all relevant factors” and “not properly valuing IP” is the kind of argument they understand and adore! Detailed transfer pricing arguments, not so much, so they glossed over them and, well, became “confused”.

The Supreme Court of Canada (the “SCC”) resolved the matter by sending it back down to the Tax Court to be retried, but taking into account the UK parent’s ownership of the IP. The reality is that the price paid to Glaxo Singapore as set by Justice Rip was correct, but if proper transfer pricing had been done there should also have been a deductible (in Canada) payment of a royalty to the UK for the brand, with the corresponding withholding tax applied in Canada (and credited in the UK).

However, this was not at all what Glaxo argued, and at trial they made no moves in that direction because the UK had higher corporate tax rates than Canada at the time, so of course there was no way Glaxo wanted a deduction of that size in Canada and a taxable inclusion in the UK. But the UK has a relatively hard statute of limitations, so by delaying the outcome of the case, even if there is a deemed royalty payment to the UK from Canada, Glaxo UK will not have to recognize it as income on their side.

Thus, Glaxo won, because the Court of Appeal was “confused”. But the true injustice of this outcome is that Justice Rip has to retry the whole case, and re-write his decision. So this thing will kill his docket for years and years and years … again … because the first go-round took a decade or so.

So with that background does Justice Boyle’s tirade against McKesson Canada’s appeal make a lot more sense? There was no way he wanted to get stuck with this mess, nor should he in all decency! Moreover, if the Appellant’s complaint was that he was biased and unfair the first time around, how could he possibly be expected to keep his temper the second?

In our view, Justice Boyle was right to complain about the Appellant’s claims of bias, incompetence and untruthfulness. Such attacks were utterly unwarranted. First of all, the case against McKesson Canada was rock solid. The initial methodology that McKesson Canada used to price the factoring transactions was weak. Their tax counsel concocted the factoring discount rate with the help of bankers who had commoditized other factoring transactions, and of course had done business with both McKesson Canada and counsel. So obviously friendly business partners came up with a number that magically managed to wipe out McKesson Canada’s entire Canadian tax bill? This is just not how proper transfer pricing is done.

Moreover, as Justice Boyle pointed out, when its position was challenged, McKesson Canada brought to court a panel of expert witnesses who somehow magically also all agreed that the original position was absolutely correct. When these experts were challenged or questioned on their assumptions, methodologies or data sets, they acted as though only a fool could possibly do things any other way. Except, of course, each of McKesson Canada’s experts did do it a different way and all came up with the exact same answer. So how does that work? They also simply refused to question their own positions, even when quite serious and egregious inconsistencies, issues and problems were pointed out to them. McKesson Canada’s experts were also equally dismissive of the Crown’s experts, methodologies, assumptions and data in a way that was neither respectful nor informative. To any objective observer, this type of behavior only serves to discredit any such witnesses beyond redemption. We all know that expert witnesses are “bought and paid for” by each side in litigation, but they are not supposed to act that way. They are supposed to be dispassionate professionals whose integrity and professionalism would require them to open minded and self-aware of the weaknesses in their own positions as well as the strengths of the opposing experts’ opinions. This is what gives them their credibility.

The problem is that this style of all-out-war/no surrender/take no prisoners litigation is quite common in the US and it is more or less expected; any sign of reasonableness is perceived as weakness. However this is just not the way it is done north of the border in our kinder, gentler tax court. And this style of litigation seems to have carried over to the appeal, because is all fairness, Justice Boyle is notoriously pro-taxpayer, provided you actually have a case and do not attempt to bullshit him. Given how off-base McKesson Canada’s original position was, and how tax-motivated the transaction was, and how lacking in credibility the defence was, it would have been entirely within Justice Boyle’s remit to have re-characterized the transaction out of existence and chucked the whole thing as a being a sham to evade tax. However, the decision itself is very pro-taxpayer! Justice Boyle ruled that multinationals can shift profit to low tax jurisdictions, to the extent that they also actually shift risk and price that risk properly and convincingly. Just in case you missed it, the key words in that sentence were: “price risk properly and convincingly”. And McKesson Canada was not even close on either count.

Lastly, Justice Boyle was right to defend his right to be sharp, sarcastic, witty, biting, somewhat creative and perhaps even entertaining in the writing of his decisions. Just because a tax judge mockingly destroys your position in his decision does not mean he or she is bias, it means your case was so devoid of merit it deserved to be mocked. Moreover, on a more personal note, 106-page tax court decisions are hard enough going to begin with. Yes, even for tax lawyers. So if Tax Court justices have to start deliberately “boring up” their decisions to make them unassailable on appeal, we do not think even tax lawyers, who have an innate and high tolerance for boring, would be able to stand it.

So overall, the upshot of the McKesson Saga is that Justice Boyle had no choice and go all “Scarface” on McKesson Canada, figuratively speaking. He feared, quite rightly in our view, that the Court of Appeal would be “confused” by the complexity of the real tax and transfer pricing issues in this case, and would therefore focus in on the things it does well and does understand (e.g. the value of IP in the Glaxo case) such as procedural fairness and the appearance of impartiality. Which could result in his decision being wrongly overturned irrelevant grounds, which would require the Supreme Court of Canada (SCC) to overturn that decision and send it back to Justice Boyle for reconsideration. Or worse, if the SCC does not grant the Appeal leave and now there would be yet another confused FCA case on tax that Boyle and his brethren at the TCC now have to follow. Given the risks, Justice Boyle had no other options.

In medieval Japan, whenever the commoners were especially hard-done-by a member of the Samurai ruling class and could no longer endure it, the eldest person in the village would make an appeal for justice to the feudal superior of the wrong-doer. The elder would of course be summarily executed for having the inexcusable effrontery to question the perfection of any of their masters’ divine rule. However, the fact that the elder was willing to sacrifice themselves in order to see justice done, earned them great “face”(posthumously) and thereby forced an otherwise implacably absolutist ruling elite to investigate and perhaps even rectify matters.

Now that Justice Boyle has committed professional seppuku, how do we address the injustices within the system that he sacrificed himself in order to bring to light? In our view, the only way forward, given that there are only going to be more “Mega-cases” that are intensely technical and complicated, even for Tax Court judges who deal with this stuff all day long, and the FCA has shown that it is out of its depth on such issues, is to change the way tax appeals are handled. To be fair, the SCC has already made it clear that it does not want the FCA to meddle too much with tax cases. In Canada Trustco,[47] the SCC said at paragraph 79 that “the Tax Court judge’s conclusions on matters of fact should not be displaced provided that they are based on the correct legal analysis and find support in the evidence.” Which is a very polite way of telling the FCA to butt-out unless there is something really egregious, and also saying at the same time, frankly the SCC does not care for tax cases very much either…

So the only plausible solution is to create a three member “Tax Court of Appeal”, consisting of the Chief Justice and/or the Associate Chief Justices and one other member of the Tax Court who had not been involved in the case. The appeal from there would be direct to the SCC, which would give the SCC grounds to deny most appeals and let most tax matters be decided by tax judges who know what they are talking about. Please note that this suggestion comes from a tax lawyer in private practice. If someone on my side of the fence has to suggest that we ought to limit the right to appeal, clearly things have gotten out of hand.

By Jonathan N. Garbutt, Barrister & Solicitor, with research support by Raminder Pandher, Student-at-law. Jonathan N. Garbutt takes responsibility for all editorial content of this blawg.

This Blawg is provided on an FYI basis, and is not intended, and cannot be considered, as legal advice.

[1] 2013 TCC 404 [Tax Court Decision]

[2] Income Tax Act, RSC 1985, c 1 (5th Supp) [the Act].

[3] Organisation for Economic Co‑operation and Development. Transfer Pricing and Multinational Enterprises:

Report of the OECD Committee on Fiscal Affairs. Paris: The Organisation, 1979. Organisation for Economic Co‑operation and Development. Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. Paris: The Organisation, 1995

Organisation for Economic Co‑operation and Development. Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. Paris: The Organisation, 2010

[4] “Anger as Starbucks boss says: We may not pay UK tax for up to three years.” Fiona MacRae, The Daily Mail. Published 23 January 2015. <<>>

[5] Income Tax Act, s. 247(2).

[6] Tax Court Decision at paras 3-4.

[7] Tax Court Decision at para 21.

[8] Tax Court Decision at para 14.

[9] Tax Court Decision at para 7.

[10] Tax Court Decision at para 16.

[11] Tax Court Decision at para 359.

[12] Tax Court Decision at para 360.

[13] Tax Court Decision at para 386.

[14] Appellant’s Memorandum of Fact and Law at para 1.

[15] Appellant’s Memorandum of Fact and Law.

[16] Appellant’s Memorandum of Fact and Law at para 9.

[17] Appellant’s Memorandum of Fact and Law at para 70.

[18] McKesson Canada Corporation v. The Queen, 2014 TCC 266 at para 7 [“Reasons for Recusal” or “Reasons”].

[19] Reasons at para 138.

[20] Reasons at para 7.

[21] Reasons at para 4.

[22] Reasons at para 21.

[23] Reasons at para 8.

[24] Reasons at para 16.

[25] Appellant’s Memorandum of Fact and Law at para 89.

[26] Appellant’s Memorandum of Fact and Law at para 84.

[27] Appellant’s Memorandum of Fact and Law at para 88.

[28] Reasons at para 80.

[29] Reasons at para 18.

[30] Reasons at para 137.

[31] Reasons at para 138.

[32] McKesson Canada Corporation v. Canada, 2014 FCA 290.

[33] McKesson Canada Corporation v. Canada, 2014 FCA 290 at para 5.

[34] Appellant’s Supplementary Memorandum of Fact and Law at para 2.

[35] Appellant’s Memorandum of Fact and Law at para 6.

[36] Appellant’s Supplementary Memorandum of Fact and Law.

[37] Appellant’s Supplementary Memorandum of Fact and Law.

[38] Appellant’s Supplementary Memorandum of Fact and Law.

[39] Appellant’s Supplementary Memorandum of Fact and Law.

[40] McKesson Canada Corporation v. Canada, 2014 FCA 290 at para 7.

[41] McKesson Canada Corporation v. Canada, 2014 FCA 290 at para 11.

[42] McKesson Canada Corporation v. Canada, 2014 FCA 290 at para 11.

[43] 2012 SCC 52 [Glaxo].

[44] At the time of Glaxo, Justice Rip was Associate Chief Justice of the Tax Court. He would later become Chief Justice and has recently elected to become a Supernumerary Judge of the Tax Court.

[45] GlaxoSmithKline Inc. v. The Queen, 2008 TCC 324.

[46] GlaxoSmithKline Inc. v. Canada, 2010 FCA 201.

[47] Canada Trustco Mortgage Co. v. Canada, 2005 SCC 54 [Canada Trustco].