Classic Transfer Pricing Case: General Electric Capital Canada Inc. v. The Queen 2009 (Part I)

Par Robert Robillard - 28 mai 2014

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In General Electric Capital Canada Inc. v. The Queen, 2009 TCC 246 (CanLII), the taxpayer requested the ability to use more than 5 expert witnesses at the hearing of the appeals. Granted.

« Factual background

[1] The Appellant brought a motion for an order for leave to allow it to adduce evidence from eight experts at the hearing of its appeals of the assessments issued against it by the Minister of National Revenue. These assessments disallow the Appellant’s claims for deductions with respect to guarantee fees paid by the Appellant to its parent corporation for the Appellant’s 1996, 1997, 1998, 1999 and 2000 taxation years, and add consequential withholding tax under Part XIII of the Income Tax Act.

[2] Mr. Meghji, counsel for the Appellant, argues that the Appellant should be required simply to make a prima facie case that it has legitimate reasons to call the three additional expert witnesses and that such expert evidence may be useful for me to hear at trial. Mr. Meghji submits that his client has presented uncontradicted affidavit evidence on both of these points. He argues, rather forcefully, that the Respondent is confusing the Court by raising issues that go to the admissibility of the evidence at trial and not to the merits of the matter now before me. He has undertaken to ensure that the evidence to be given by each witness will not be duplicative and accepts being held to this undertaking. Finally, he notes that the Respondent, in opposing the motion, alleges prejudice, but, unlike the Appellant, has not proffered any evidence, whether in the form of affidavit evidence or otherwise, to establish the nature of the prejudice it will suffer if I grant the motion. Finally, Mr. Meghji accepts that section 7 of the Canada Evidence Act (the “CEA”) limits each side to five experts for the case and not five experts per issue as suggested by a contradictory line of cases. The former sets a stricter standard to be met.

[3] The Respondent opposes the motion on the grounds that there is only one issue to be decided at trial and that the additional three experts will be called to deal with exactly the same matter. Furthermore, the Respondent argues that it has only recently become aware of the Appellant’s intention of calling more than five expert witnesses. The Respondent alleges it will suffer a prejudice if I allow the motion, as counsel for the Respondent would then have to spend the three weeks remaining before trial dealing with the three additional expert reports as opposed to preparing the Respondent’s own case. The Respondent alleges that it believed that the Appellant would call only five expert witnesses when it agreed to the trial date and the length of time set aside for the hearing. »

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General Electric Capital Canada Inc. v. The Queen, 2009 TCC 246 (CanLII)

General Electric Capital Canada Inc. c. La Reine, 2009 CCI 246 (CanLII)

Robert Robillard, CPA, CGA, MBA, M.Sc. Econ.
Transfer Pricing Chief Economist, RBRT Inc.
514-742-8086; robert.robillard « at » localhost

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