
Key Takeaways
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Forum defines outcomes: The taxpayer’s appeal was quashed without the merits ever being heard because the chosen forum lacked jurisdiction.
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Procedure equals substance: Courts enforce jurisdiction strictly, even when sympathetic to the taxpayer’s position. Procedural foresight can be as outcome-determinative as substantive strength.
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Statute-barred risk: When years close during litigation, even success in judicial review may carry no practical utility — strong positions can be left unrecoverable.
The Situation
MEGLobal Canada ULC was reassessed for upward transfer pricing adjustments under s. 247(2) of the Income Tax Act. After objections, the Minister vacated the upward adjustments but refused to make downward adjustments under s. 247(10). MEGLobal appealed to the Tax Court and also filed for judicial review in the Federal Court. The Tax Court appeal was held in abeyance pending the Supreme Court’s decision in Dow Chemical.
When the SCC confirmed that discretionary denials under s. 247(10) fall outside the Tax Court’s jurisdiction, MEGLobal’s appeal was effectively doomed. The company sought to amend its appeal to have the Tax Court determine transfer pricing methodology, but the Court held it lacked authority to order reconsideration of discretionary decisions. The appeal was quashed, costs awarded to the Crown, and the relevant years were statute-barred.
What Made the Difference
The decisive factor was procedural judgment, not the strength of the transfer pricing position. By pursuing relief in the Tax Court, MEGLobal’s case was confined to a jurisdiction that the SCC later confirmed had no authority over the dispute. The attempt to reframe the matter as a reassessment failed, and the taxpayer’s amendment request was rejected. While the Court acknowledged the fairness concern, that statute-barred years left the taxpayer without a practical remedy, it would unlawfully extend jurisdiction beyond its limits.
The Signal for Business Leaders
MEGLobal highlights a recurring pattern: in high-stakes tax disputes, strong arguments can be lost entirely when forum and timing are misjudged. Courts consistently apply jurisdictional limits, even when the taxpayer’s position is compelling.
The pattern is clear: defensible resolutions emerge when forum selection, procedural framing, and timing are treated with the same discipline as substantive arguments. Without that foresight, years of litigation can close with remedies barred and positions left unheard.
Case reference: MEGLobal Canada ULC v. The King, 2025 TCC 50