[2013] 4 F.C.R. D-3
Income Tax
Non-residents
Judicial review of Canada Revenue Agency’s alleged continuing refusal to provide applicant relief from double taxation in breach of Convention Between Canada and the United States of America with Respect to Taxes on Income and on Capital, being Schedule I of the Canada-United States Tax Convention Act, 1984, S.C. 1984, c. 20 (Treaty)—Treaty aiming to shield taxpayers in United States, Canada from double taxation—Both countries designated “competent authorities” (i.e. Canada Revenue Agency (CRA), Internal Revenue Service (IRS)) to deal with claims arising thereunder—Applicant wholly owned subsidiary of American company (TeleTech Holdings, Inc. or TeleTech US, together “companies”)—Following corporate restructuring, companies reducing Canadian client base, applicant becoming a subcontractor of TeleTech US, with TeleTech US providing administrative services to Canadian counterpart—Applicant stating that as result of internal accounting errors, its profits for 2000, 2001 and 2002 taxation years “dramatically overstated” in financial statements, profits of TeleTech US “dramatically understated”—Applicant filing request with CRA for competent authority assistance, seeking relief from alleged double taxation under the Treaty—That request denied by CRA on basis tax authorities in Canada, United States taking no action resulting in taxation not in accordance with the Treaty (first denial letter)—Companies subsequently sending CRA supplemental request for competent authority assistance under Treaty—That document advising CRA of outcome of 2008 IRS audit of TeleTech US, seeking relief from double taxation allegedly resulting from adjustments made to TeleTech US’ income by IRS—CRA denying that request on basis unable to provide applicant with “correlative relief” as notification of “U.S. initiated adjustments” not received within the six-year period provided for under Treaty, applicant’s tax returns statute barred from reassessment (second denial letter)—Principal issues whether CRA engaging in a continuing course of conduct, open to applicant to argue CRA erring in requiring, as prerequisite to relief, government action resulting in taxation not in accordance with Treaty—CRA’s first denial letter final decision in relation to first request, not merely step in continuing course of conduct—Open to applicant to commence judicial review of decision but chosing not to do so—Having failed to challenge first denial letter, applicant not now permitted to challenge CRA’s finding that, as of November, 2006, neither Canadian nor American tax authorities taking any action resulting in taxation not in accordance with Treaty—Application dismissed.
TeleTech Canada Inc. v. Canada (National Revenue) (T-788-11, 2013 FC 572, Mactavish J., judgment dated May 29, 2013, 29 pp.)