Companies Get a Boost From Canada’s Loss in Tax Avoidance Case

A Canadian court ruling siding with a pharma company in a capital gains tax case will dampen the country’s ability to tackle aggressive tax avoidance cases until new auditing powers kick in, according to practitioners.

Several tax pros said the judgment will hinder the revenue agency’s power to pursue capital gains transactions it deems illegal. The decision’s bigger effect, other lawyers say, will be the way it informs a more aggressive revenue agency as it ratchets up auditing under newly strengthened anti-avoidance powers that went into effect this year.

Those new powers apply only to cases under review after a ...