SCC Dismissed Glencore Canada's Application For Leave To Appeal

The Supreme Court of Canada (“the SCC”) recently dismissed Glencore Canada Corporation's application for leave to appeal the FCA's 2024 decision (2024 FCA 3) which held that break fees received by the Appellant (Glencore) were properly taxable as income. Taxpayers must be attentive to the Federal Court of Appeal (“the FCA”)'s guidance on the tax classification of break fees when drafting break fee provisions to ensure that they (or their client's) obtain the desired tax treatment.

Case Facts

The Appellant's predecessor corporation was the potential acquirer in a Merger and Acquisition (M&A) transaction. The transaction fell through due to a competing offer, entitling the Appellant to a break fee payment. The Appellant did not include the amount received in their business income in their associated tax return and was subsequently reassessed by the CRA.