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In Heron Bay Investments Ltd. v. The Queen, the Tax Court considered whether a $3.77 million non-recourse demand loan made in 1994 by Heron Bay to another corporate group member met the criteria for deductibility under the Income Tax Act (Canada) as either a doubtful debt or a bad debt in Heron Bay’s 1995 taxation year
On May 17, 2010, the Federal Court of Appeal allowed the taxpayer’s appeal in Lehigh Cement Limited v. The Queen, holding that the general anti-avoidance rule (“GAAR”) did not apply to a series of transactions through which Lehigh’s interest payments on debt held by a related non-resident corporation were paid free of withholding tax to an arm’s length non-resident bank
