MEGlobal Canada ULC v. The King: When Split Jurisdiction Leaves A Gap In Relief

• Published date: 26 June 2025
• Subject Matter: Litigation, Mediation & Arbitration, Tax, Trials & Appeals & Compensation, Income Tax, Transfer Pricing, Tax Authorities
• Law Firm: McCarthy Tétrault LLP
• Author: Tax Perspectives, Al-Nawaz Nanji, Erich Schultze and Sarosh Noor

On March 26, 2025, the Tax Court of Canada (the "Tax Court") held that it lacked jurisdiction to hear an appeal from MEGlobal Canada ULC (the "Taxpayer").¹ The Taxpayer sought to challenge the Minister of National Revenue's (the "Minister") refusal to grant a downward pricing adjustment under subsection 247(10) of the Income Tax Act (the "Act").

This decision reinforces the split jurisdiction between the Tax Court (where taxpayers can challenge an assessment) and Federal Court (where taxpayers can review discretionary decisions by the Minister). The decision also reveals a potentially unfair outcome under the Act: even if a taxpayer is successful in its review of the Minister's discretionary decision to decline a downward adjustment, the Minister may then be statute-barred from issuing the reassessment that would provide the taxpayer with the appropriate relief.

Background

The Minister reassessed the Taxpayer to reflect an upward transfer pricing adjustment under subsection 247(2) of the Act for the 2008, 2010, and 2011 taxation years. Around the same time as the reassessments, the Taxpayer's parent company discovered that it overpaid for certain supplies. Accordingly, the Taxpayer objected to the notices of assessments and argued that there should instead be a downward adjustment.

The Minister vacated the upward adjustments but refused to grant the Taxpayer a downward adjustment...