VANCOUVER — The Canada Revenue Agency (CRA) has taken the first shot in what is likely to be a protracted legal battle with streaming company Silver Wheaton (TSX: SLW; NYSE: SLW), and the results could affect the company’s entire business model. In fact, senior vice president and CFO Gary Brown went so far as to infer the action represents an attack on a tenet of Canadian tax law.
On July 7 Silver Wheaton received a proposal letter from the CRA relating to income earned by its foreign subsidiaries outside of Canada. The crux of the dispute boils down to whether the company’s taxable income should be increased by roughly US$567 million for the 2005 to 2010 business years. Under preliminary estimates that could put the company on the hook for a US$150-million bill.
“They’re challenging us under the transfer pricing provisions of the Canadian Income Tax Act, which is very complex,” Brown explained during a conference call. “The CRA is essentially looking to re-characterize the income earned by our foreign subsidiaries to income earned by the Canadian parent company. We strongly disagree with that position. We believe in our business structure, which really operates under a tenant of Canadian tax law. There’s very little associated case law here and no precedent for this that we’re aware of.”
Read the complete article at NorthernMiner.com/news/silver-wheaton