The McKesson Case : A Further Debate on Key Transfer Pricing Principles

The trial of McKesson Canada Corporation v. The Queen commenced in the Tax Court of Canada in Toronto on 17 October 2011 and is expected to take six to seven weeks. This case concerns a related party debt factoring arrangement between McKesson Canada Corporation (McKesson) and McKesson International Holdings III S.A. R.L. (the factor) resident in Luxembourg. It already appears that certain key techniques and assumptions used in this common type of tax planning arrangement have been called into question and McKesson will surely join GE Capital Canada , GlaxoSmithKline and Alberta Printed Circuits as another key source of transfer pricing case law and precedent originating from Canada. This paper considers key questions and issues currently before the court