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ARTICLE · 17 JUNE 2013

"Daishowa": Characterizing The Assumption Of Obligations When Determining The Proceeds From Disposition

Gowling WLG
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In "Daishowa-Marubeni International Ltd. v Canada", the Supreme Court of Canada held 9:0 that Daishowa-Marubeni International’s proceeds from the disposition of two forest tenures should not include the reforestation obligations that were assumed by the purchasers.

CanadaGovernment, Public Sector
Connor McGarry
Connor McGarry
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In Daishowa-Marubeni International Ltd. v Canada, 2013 SCC 29, the Supreme Court of Canada (“SCC”) held 9:0 that Daishowa-Marubeni International’s (“DMI”) proceeds from the disposition of two forest tenures should not include the reforestation obligations that were assumed by the purchasers. This decision overturned the findings of the Tax Court of Canada (“TCC”) and the Federal Court of Appeal (“FCA”) that the proceeds from disposition should include the reforestation obligations.

The decision of the SCC in the Daishowa case has been eagerly anticipated by tax practitioners and participants in the mining, oil and gas, and timber industries across Canada. The lower-court decisions have produced a great deal of uncertainty in these industries. Reportedly, a large number of reassessments with huge financial impacts have been made by the Canadian Revenue Agency using the lower court decisions in Daishowa as support.

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