Tax Treaty Case: Velcro Canada Inc. v. The Queen, 2012 TCC 273

Par Robert Robillard - 19 janvier 2015

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In Velcro Canada Inc. v. The Queen, 2012 TCC 273 (CanLII), both parties are producing submissions on costs as it pertains to the decision rendered in Velcro Canada Inc. v. The Queen, 2012 TCC 57.

« [3] In recent years, costs have played a more significant role in tax litigation. Tax cases are becoming more complex, taking longer to prepare with detailed case management and larger amounts in dispute – all contributing to what appears to be more resources being used to litigate appeals. One issue that arises constantly is the application of the Tariff versus awards in excess of the Tariff, lump sum awards, the circumstances where the Tariff is not applied, and the analytical process in awarding and fixing costs. »

At the heart of the matter is Rule 147 of the Tax Court of Canada Rules (General Procedure), SOR/90-688a. Rule 147 pertains to the general principles with respect to « the amount of the costs of all parties involved in any proceeding, the allocation of those costs and the persons required to pay them. »

After a careful examination of the facts, the Court stated:

« [29] Considering all the factors I have referred to under Rule 147(3) and the wide discretion that the Court has in awarding costs, I make an award of $60,000 plus disbursements in favour of the Appellant as noted in the Appellant’s Bill of Costs plus all applicable taxes. I readily recognize that the $60,000 lump sum award is nowhere near the legal fees incurred by the Appellant through the course of the appeal, nor does it reflect the amount presented under the Tariff. As noted by many jurists, costs are not intended to compensate litigants for their litigation costs. This lump sum award is significantly less than the actual litigation costs incurred by the Appellant. The fair disposition of this matter, partially compensating the Appellant for having to come to Court and justify their position and be as successful as they were, is the lump sum award of $60,000. This lump sum award also recognizes the significant effort put into the litigation by the Appellant and their focused presentation at the appeal hearing on this novel issue. This lump sum award is, in my view, a fair and reasonable reflection of what a costs award should be given the reasons that I enumerated above. »

To see the full tax treaty case click here. Aussi disponible en français ici.

Velcro Canada Inc. v. The Queen, 2012 TCC 273 (CanLII)

Velcro Canada Inc. c. La Reine, 2012 CCI 273 (CanLII)

See all the Canadian transfer pricing jurisprudence on RBRT’s jurisprudence page available here.

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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