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ARTICLE · 28 NOVEMBER 2025

Loss Consolidation Under GAAR: When Interpretation And Judgement Decide The Outcome

Counter Tax Litigators LLP
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Quebecor v. HMK shows how a well-framed economic narrative can support a CRA loss consolidation challenge...

CanadaTax
Peter Aprile
Peter Aprile
Natalie Worsfold
Natalie Worsfold
James Roberts
James Roberts
Jennifer Mak
Jennifer Mak
Author LinkedIn connections

Quebecor v. HMK shows how a well-framed economic narrative can support a CRA loss consolidation challenge

Key Takeaways

  • Loss consolidation transactions attract CRA scrutiny even when they align with Parliament's design.
  • The mechanical structure rarely drives the dispute – the interpretive record does.
  • Business leaders who account for the time and cost of a multi-year CRA challenge reach clearer conclusions about a transaction's value.

The Situation

Quebecor Inc. and its indirect subsidiary, 3662527 Canada Inc., held offsetting tax positions: Quebec faced a $191.8M unrealized gain related to shares it held in Abitibi Consolidated Inc., while 366 had a $200.5M unrealized loss. A series of transactions increased Quebecor's cost base in its Abitibi shares and moved the loss within its corporate group.

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