Federal Court of Appeal overturns Tax Court of Canada decision

VANCOUVER, British Columbia, Aug. 05, 2021 (GLOBE NEWSWIRE) — Deans Knight Income Corporation (the “Company”) announces that the Federal Court of Appeal has overturned the decision of the Tax Court of Canada dated April 5, 2019, and confirmed the Canada Revenue Agency’s reassessments. The result is that the deduction of the Company’s tax attributes in its 2009 to 2012 taxation years have been denied on the basis of the General Anti-Avoidance Rule in the Income Tax Act (Canada).

The Company’s consequential tax liability for the 2009 to 2012 taxation years is approximately $22.7 million, including arrears interest and penalties. In order to limit additional interest and penalties from accruing during the litigation process, the Company prepaid all amounts owing under the reassessments to the CRA in 2014.

The Company now has 60 days to seek leave to appeal the decision to the Supreme Court of Canada and is considering this option with its legal advisors. Accordingly no financial statement adjustments have been made at this time as we assess the impact of the decision on Net Asset Value. The Company intends to issue a further press release following its determination as to whether it will proceed with an appeal.

Disclosure regarding forward-looking statements

This news release includes forward-looking statements about expected future events, including, but not limited to, the anticipated timing of the Company’s assessment of the impact the Federal Court’s decision will have on Net Asset Value. Although the Company believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements and you should not unduly rely on forward-looking statements.

These forward-looking statements are based on various assumptions including, but not limited to, the estimated timing of the Company’s assessment of the impact on Net Asset Value. By their nature, forward-looking statements involve numerous known and unknown risks and uncertainties and other factors that contribute to the possibility that the predicted outcome will not occur, including, without limitation: the risk that the assessment undertaken by the Company does not result in a definitive outlook on the impact to Net Asset Value. Readers are cautioned that the foregoing list of factors is not exhaustive. The forward-looking statements contained in this news release are made as the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities law.