Précis: In a case blogged earlier on this site I reported that the Tax Court denied TDL Group Co. the deduction of interest on a large loan ($234 million) for a period of 7 months in 2002 on the basis that the funds (which were used to purchase shares of a US subsidiary) were ultimately used to advance an interest free loan to Wendy’s International Inc. (“Wendy’s”), the group parent. The loan to Wendy’s was interest free because of concerns about US state taxes and the thin capitalization rule in Canada. Those concerns were resolved and in November of 2002 the loan was restructured to make it interest bearing. CRA allowed the deduction of interest by TDL commencing in November but denied it for the preceding 7 months.
TDL Group Co. v. R. - FCA: Court of Appeal allows TDL appeal on deduction of interestPlus >