Canadian Grocer Loblaws Wins Tax Fight Over Barbados Subsidiary

Canadian grocery chain Loblaws Companies Ltd. prevailed in a tax dispute over whether laws on tax avoidance for passive overseas income applied to its subsidiary in Barbados.

The Tax Court of Canada erred when it determined in September 2018 that Glenhuron Bank Ltd., a Loblaws subsidiary in Barbados, did most of its work with non-arm’s length parties and fell under the foreign accrual property income, or FAPI, provisions of the Income Tax Act, the Federal Court of Appeal ruled Thursday.

The FAPI provisions target Canadians who try to avoid tax on passive income by earning that income in ...