Food Firm Loses Canada Tax Battle Over $7.4 Million Loss Claim

An Ontario food company lost a court battle with Canada’s federal tax agency Thursday over a C$9.7 million ($7.4 million) loss it claimed on its tax return.

The Federal Court of Appeal found that Keybrand Foods Inc., which makes prepared foods for restaurants and grocery stores, wasn’t operating at arm’s length with Vidabode Group Inc., a company developing a concrete project, when Keybrand bought Vidabode’s shares in 2010.

Keybrand claimed Vidabode’s bankruptcy soon after as a loss in tax filings. Such a claim, which can greatly reduce a tax liability, is only admissible if two firms operate at arm’s length. ...