Bank of Nova Scotia v. His Majesty the King
The Canadian Centre for Tax Policy was an Intervener in the Supreme Court of Canada case of Bank of Nova Scotia (BNS) v. the King.
The Centre intervened to address the public importance of applying the guiding principles of predictability, certainty and fairness in the interpretation of the Income Tax Act. This appeal concerned the interpretation of a provision in the Act involving the computation of interest on tax owed from a prior year. We show that an interpretation grounded in the entire text of the provision and situated within its administration and enforcement context is not only correct but also ensures policy coherence.
The appeal hearing was held on January 21, 2026. The Canadian Centre for Tax Policy presented oral argument at the hearing, which you can watch starting at 2:08 of the webcast (linked below).
Husky Energy Inc. v the King
In 2024, the Centre sought to intervene at the Federal Court of Appeal level in a case involving Husky Energy Inc., Canada v. Hutchison Whampoa Luxembourg Holdings S.À R.L. The case involved the payment of dividends to foreign shareholders by Husky Energy Inc., a Canadian company. In brief, Husky had withheld 5% of tax on dividends it paid to companies organized in Luxembourg (the LuxCos, not parties to the case) under the Canada-Luxembourg treaty. But the Crown identified two companies incorporated in Barbados (Hutchison Whampoa and LF Management and Investments, aka the BarbCos) as the beneficial owners of the dividends and accordingly subjected these companies, and Husky as the withholding agent, to tax at the rate of 15% per the Canada-Barbados treaty instead. At Tax Court, Justice Owen determined that the LuxCos were the payees of the dividends but not the beneficial owners, so no treaty rate could apply. As such, the proper rate should have been the statutory default of 25%, but since the Crown had only sought to impose 15%, the judgment was limited to 15%.
The parties appealed and we sought to intervene in order to assist the Court by providing our non-partisan analysis of the application of agency law, as modified by the treaty-based beneficial ownership rule, to Canada’s withholding tax regime.
Our efforts were unsuccessful but we share the documents here because they outline the reasons we sought intervention, the submissions we sought to make in the case, and the responses of the appellants, each of whom sought successfully to prevent our intervention (see links below). The appellants also sought an award of costs from the Centre but the Court did not grant this request.
Ultimately, the Federal Court of Appeal determined that the Tax Court had not erred in determining that the Luxembourg treaty rate did not apply. However, the FCA did not address the content of our submissions regarding the proper treatment of payments through conduits in the application of Canada’s withholding tax regime when the treaty-based beneficial ownership standard is involved. Husky is currently seeking leave to appeal the FCA decision to the Supreme Court.
