Her Majesty the Queen v. Cameco Corporation

(Federal) (Civil) (By Leave)


Taxation - Taxation — Corporate taxation — Assessments — Foreign Subsidiaries — Transfer pricing adjustment — What is the correct articulation of the transfer pricing regime which remains consistent with the internationally accepted arm’s length standard?.


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Cameco Corporation, together with its subsidiaries, is a large uranium producer and supplier of the services that convert one form of uranium into another form. Cameco has facilities in Saskatchewan and Ontario along with subsidiaries which own assets in the United States. In 1999, a subsidiary of Cameco, Cameco Europe S.A. (CESA), and other companies purchased Russian uranium that was formerly used in its nuclear arsenal. The uranium was provided for sale through a Russian state-owned company “Techsnabexport” (Tenex). Later in 1999, CESA entered into an agreement with Urenco Limited (Urenco) (a uranium enricher) and three of its subsidiaries to purchase uranium that Urenco would be receiving from Tenex. Cameco formed another subsidiary in Switzerland which changed its name in 2001 to Cameco Europe AG (SA, Ltd) (CEL). In 2002, CESA transferred its business to CEL. The profits realized by CEL from buying uranium from Tenex, Urenco, and Cameco and then selling it were substantial. The Minister of National Revenue reassessed Cameco’s income for the taxation years 2003, 2005, and 2006. The Minister added more than $480 million for those taxation years due to transfer pricing adjustments. Cameco appealed the reassessment to the Tax Court of Canada who referred the reassessments back to the Minister for reconsideration. The Minister’s subsequent appeal was dismissed.