J.D. Irving Limited in its successful appeal of Revenu Québec’s reassessments

On June 9, 2020, J.D. Irving Limited was successful in its appeal of Revenu Québec’s reassessments. The reassessments had applied technical tax regulations to deny the taxpayer the benefit of a related group loss consolidation transaction and were premised on recharacterizing the legal agreements entered into by the taxpayer. The Court ruled that the transactions constituted a related group loss consolidation and confirmed that although there is no formal regime for loss consolidation in Canada or Quebec, a related group can effect a consolidation by related party transactions and reorganizations. It confirmed that loss consolidations are a “basic element of corporate tax planning” and that, per the SCC decisions in Shell and Continental Bank, the nature of the agreements entered into by the taxpayer to effect the transactions in this case could not be recharacterized as a matter of law.

On February 17, 2022, the Quebec Court of Appeal released its decision in Agence du revenu du Québec vs. J.D. Irving Limited, in which it dismissed Revenu Québec’s appeal of a decision rendered by the Court of Quebec.

J.D. Irving Limited is a North American forestry company specializing in agriculture, construction and equipment, consumer products, hydro energy, food, forestry and forestry products, retail and distribution, shipbuilding and industrial fabrication and transportation and logistics.

Osler, Hoskin & Harcourt LLP advised J.D. Irving Limited, the trial was conducted by Louis Tassé (Tax), Laura Scheim (Litigation), Maude Lussier-Bourque and David Wilson (Tax) of the Montreal office, with contributions from Stéphane Eljarrat (Litigation), Robert Raizenne, Joanne Vandale, Evan Belfer and Caroline Berthelet (Tax).