CIBC’s Enron tax fight goes to trial in 2019

to the Financial Post that it “has sought an early trial date since the onset, and we are pleased one has now been set.”

Rossiter noted in the 2015 order that the outcome of the proceeding hinges on whether or not CIBC can deduct the settlement amounts as expenses.

The deductions had been denied on several grounds, the judge noted in his 2015 order, including that “they were not incurred to earn and produce income from business and did not conform to well-accepted business or accounting principles.”

CIBC, according to a Federal Court of Appeal judgment, claimed its deductions were consistent with Canadian generally accepted accounting principles, or GAAP, and the Income Tax Act.

A spokesperson for the CRA said in an emailed statement that the agency could not comment on details of the case, citing the fact that it is before the courts and because of the confidentiality provisions of the Income Tax Act.

Jonathan Farrar, associate professor of accounting at Ryerson University’s Ted Rogers School of Management, said in a recent interview that the $3-billion deduction at the heart of the case is “absolutely astronomical.”

“So it’s something that the CRA is going to be treading very carefully with, because it’s worth so much in tax revenues to them,” Farrar said.

There is plenty at stake for the bank as well, which says it paid tax of approximately $1.05 billion following the reassessments that is on-deposit with the CRA until the appeal is decided.

In its management’s discussion and analysis for the year ended Oct. 31, 2017, CIBC said that if it is successful in defending its tax position, it would recognize an additional accounting benefit of up to $231 million and taxable refund interest of approximately $198 million.

If it fails in its defence, CIBC said it would face an additional tax expense of up to around $820 million and non-deductible interest of approximately $157 million.