Photo by: Reuters
TORONTO (miningweekly.com) – In another potential financial blow to precious metals streaming firm Silver Wheaton, the Canadian Revenue Agency (CRA) has notified it that it would be reassessing the company’s international transactions covering the 2011 to 2013 taxation years, potentially placing the company on the hook to pay another $310-million in tax for the period.
The TSX- and NYSE-listed company was already embroiled in an acrimonious standoff with the CRA over the agency’s reassessment of Silver Wheaton’s 2005 to 2010 taxation years, and the collect taxes on income earned by Silver Wheaton’s offshore subsidiaries.
Silver Wheaton, which provided financing to miners in exchange for the right to buy a share of their future metal output, last year reported that according to the notices of reassessment, the CRA was looking to increase Silver Wheaton’s income – subject to tax in Canada for the relevant tax years – by about C$715-million, which would result in a federal and provincial tax amount of C$201-million. The CRA was also seeking to impose transfer pricing penalties of about C$72-million plus interest and other penalties of C$81-million for the period.
The total tax, interest and penalties sought by the CRA for the 2005 to 2010 taxation years amounted to C$353-million.
Silver Wheaton took delivery of precious metals under its forward-sales contracts position through its Cayman Islands-registered subsidiaries, which the company asserted were independent from the Canadian parent. It was up to the sovereign State of the Cayman Islands to determine the corporate tax rates the subsidiaries would be subjected to, which just happened to be 0%.
INEFFICIENT APPEALS PROCESS
The company on Wednesday advised that it had earlier this month filed a notice of appeal with the Tax Court of Canada, in an effort to hasten resolution of the 2005 to 2010 notices of reassessment, choosing to pursue a judicial court process rather than the CRA’s internal appeals process.
The company had the right to file a notice of appeal within 91 days after it had filed a notice of objection.
“We remain confident in, and we intend to vigorously defend, our business structure. We believe that we have complied with Canadian tax law and feel that the court process, rather than the CRA appeals process, will provide the most expeditious avenue for the resolution of this matter,” stated president and CEO Randy Smallwood.
Silver Wheaton noted that, despite it not being possible to provide the timing of the court process for the 2005 to 2010 taxation years and the audit of the 2011 to 2013 taxation years, management intended to vigorously defend any challenge to the company’s tax filing positions.