Tax court rules in Cameco’s favour in dispute with CRA

Shares in Cameco Corp. shot higher Thursday after the company said the Tax Court has ruled in its favour in part of a dispute with the Canada Revenue Agency where billions of dollars are at stake.

The case centres around Cameco’s use of a subsidiary in Switzerland to sell and trade its uranium. The CRA contends it was a sham established to avoid Canadian taxes, while Cameco has maintained it was for legal and sound business practices.

Cameco chief executive Tim Gitzel called the judgment issued Wednesday a clear victory.

“It was a clear and decisive ruling in our favour. Our company has been through a lot over the last several years, so this is a great day for Cameco,” he told a conference call with financial analysts.

The company’s shares were up $1.51 or about 15 per cent at $11.35 in mid-afternoon trading on the Toronto Stock Exchange after spiking to as high as $15.62 in the morning.

The ruling only covers the company’s 2003, 2005 and 2006 tax years where about $11 million in taxes is at stake, but will have implications for subsequent years where some $2 billion in taxes plus interest and penalties are in question, Gitzel said.

“We believe the thorough and meticulous analysis of the facts in the judgment will make it difficult to overturn, and furthermore will be relevant in determining the outcome for sub- sequent years.”

The CRA will “carefully review the decision and will respond in due course,” a spokesperson said by email, noting the agency has until Oct. 26 to appeal the decision to the Federal Court of Appeal.

The company will be making an application to recover the costs incurred for this case that total about $57 million.