July 7 (Reuters) - Silver streaming company Silver Wheaton Corp said it received a proposal from the Canada Revenue Agency (CRA) on Monday to reassess the company under various income tax rules.
The CRA is seeking to tax streaming income earned by the company’s foreign units and said that Silver Wheaton’s taxable income should be increased by about C$715 million (about $565 million) for the years 2005 to 2010.
“Generally a company is taxable in Canada on its income earned in Canada, while non-Canadian income earned by foreign subsidiaries is not subject to Canadian income tax,” Chief Executive Randy Smallwood said in a statement.
Silver Wheaton, which makes upfront payments for the rights to buy future precious metal production, said it is not required to make any payment to the CRA at this time and that it intends to vigorously defend its tax filing positions.
Silver Wheaton said the CRA may issue notices of reassessment for one or more of the taxation years if it fails to reach a resolution at the proposal stage.
The company estimates it would be subject to federal and provincial tax of about $150 million for the relevant taxation years if Silver Wheaton would be assessed taxes on the foreign subsidiaries’ income on the same basis as its Canadian income.
The CRA is also seeking to apply transfer pricing penalties of about C$72 million.
Taxation years after 2010 remain open to audit by the CRA, Silver Wheaton said.
A proposal letter is not a reassessment but sets out the possible adjustments to the taxpayer’s income and the CRA’s reasons for a proposed reassessment, the company said. ($1 = 1.2659 Canadian dollars) (Reporting by Zara Mascarenhas in Bengaluru; Editing by Gopakumar Warrier)