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ARTICLE · 12 FEBRUARY 2026

Where An Interest Deduction Dispute Is Effectively Shaped

Counter Tax Litigators LLP
Counter Tax Litigators LLP
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Counter Tax Litigators LLP

Counter Tax Litigators LLP

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Keybrand Foods Inc. v. HMQ, shows how interest-deductibility disputes, and others like them, are shaped after reassessment as the objection record crystallizes...

CanadaLitigation, Mediation & Arbitration
Peter Aprile
Peter Aprile
Jennifer Mak
Jennifer Mak
Yasmin Malik
Yasmin Malik
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Keybrand shows how s. 20(1)(c) disputes turn on which explanation takes hold

Keybrand Foods Inc. v. HMQ, shows how interest-deductibility disputes, and others like them, are shaped after reassessment as the objection record crystallizes the explanation of the business situation that will carry forward into the Tax Court appeal.

Key Takeaways

  • Keybrand's ABIL claim turned on how the share subscription was characterized at the time of acquisition, including whether the parties were dealing at arm's length and what that meant for cost base.
  • In parallel, the record related to CRA's decision to deny Keybrand's interest deduction under s. 20(1)(c) reflected a single explanation of what the financing was understood to accomplish, with no competing account gaining traction through objection or appeal.

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