Photo by: Bloomberg
TORONTO (miningweekly.com) – The world’s largest precious metals streaming firm Silver Wheaton intends to vigorously defend its tax filing positions, after it received a proposal from the Canadian Revenue Agency (CRA) to reassess the company under various rules contained in the Income Tax Act.
In a letter dated July 6, the CRA outlined that the transfer pricing provisions of the Income Tax Act relating to income earned by Silver Wheaton’s foreign subsidiaries outside of Canada should apply, thereby increasing the income of Silver Wheaton subject to tax in Canada for the 2005 to 2010 taxation years by about C$715-million.
Silver Wheaton, whose business model entailed making upfront payments for the rights to buy future precious metal output from projects, said it was not required to make any payment to the CRA at this time.
“Generally, a company is taxable in Canada on its income earned in Canada, while non-Canadian income earned by foreign subsidiaries is not subject to Canadian income tax,” CEO Randy Smallwood explained.
Silver Wheaton estimated that it could be subject to federal and provincial tax of about $150-million for the relevant taxation years if the company was to be assessed for tax on the foreign subsidiaries' income on the same basis as its Canadian income.
The CRA proposal also indicated that the agency sought to apply transfer-pricing penalties of about C$72-million regarding the relevant taxation years.
Further, taxation years after 2010 remained open to CRA audits.