The taxpayer's victory is now complete and multinational enterprises around the world can breath a little easier - the Crown will not be seeking leave to appeal the Federal Court of Appeal's decision in The Queen v. Prévost Car, Inc. to the Supreme Court of Canada. The Federal Court of Appeal's decision in this case now firmly reflects the proper interpretation of the term "beneficial owner" for purposes of determining a non-resident's entitlement to reduced rates of Canadian withholding tax on interest, dividends and royalties pursuant to a Canadian income tax convention. Please click here for prior coverage of this case.
In finding for the taxpayer, the Federal Court of Appeal refused to adopt an ambiguous and flexible meaning of "beneficial owner" put forward by the Canada Revenue Agency, which could have threatened the viability of numerous international holding company structures. Instead, the Court opted for a more practical meaning that, in its view, provides greater "certainty and stability" to taxpayers.
The final outcome of the Prévost case provides the perfect opportunity for taxpayers to revisit international holding company structures against a judicially-established benchmark in order to better assess the availability of treaty benefits and manage the audit risk in their particular circumstances.