Chrysler Canada gets slapped with $500 million tax bill
Just as Chrysler tries to hammer out a cash deal with Ottawa and Ontario for at least a billion dollars, the automaker's Canadian branch has been hit with a half-billion dollar tax reassessment. The Canada Revenue Agency has been trying to collect tax payments from Chrysler for years, after the agency adjusted the amount Chrysler owes on parts and vehicles that were shipped across the border. Canada Revenue wants $500 million to pay off abuses from "transfer pricing," which is a bit of voodoo between subsidiaries and the parent divisions of corporations -- a shell game with profits, essentially.
One problem with this tax bill is the time at which it's coming. Chrysler has pledged that any monies received as part of bailout negotiations would go to keeping the operations going, not to pay back taxes. Also, there's a treaty between Canada and the United States that allows Chrysler to ask for a break in the US when Canada turns up the wick on fiduciary obligations. The treaty states that authorities must be made aware of reassessments within six years of the disputed year, and since this issue stretches all the way back to 1996, Chrysler argues that the last reassessment, in 2005, deprives the company of the option of asking for a tax break because it's outside of the six year window. For now, the dispute will have to wait, as there may not be a Chrysler for much longer if things don't get sorted -- meaning a big, fat goose egg of a tax payment.
[Source: The Globe and Mail]
Reader Comments (Page 1 of 1)
AirRaid 6:04PM (2/20/2009)
Take that, take that...yeah.
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AirRaid 6:15PM (2/20/2009)
Fake Canadian ID and free healthcare for everyone. It's our damn money anyway, apparently.
D.C. was right.
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axlewood 6:17PM (2/20/2009)
thats a pretty stupid deduction.
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misterdbarton 6:29PM (2/20/2009)
I'm guessing CRA will get all of $0 CAD.
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Gardiner Westbound 6:49PM (2/20/2009)
Chrysler's defense won't fly. There is no Canadian statute of limitations for tax evasion. It's like a kid who murdered his parents asking the court for clemency because he is an orphan.
The tax department civil servants who are sending out the friendly reminders to Chrysler for $500-million in back taxes owed since 1996 are the same ones who routinely stand on senior citizens' throats and go through their pockets looking for loose change to confiscate.
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StanleyVanBuren 7:05PM (2/20/2009)
I'm not your buddy, guy.
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cFoo 7:15PM (2/20/2009)
That's pretty lame. It's so American to think health care is free in Canada.
If anything, that's no excuse to commit tax fraud. If it was in the US the IRS would have shut them down years ago. It's no different than handing out money to someone serving jail time for tax evasions.
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Steve 7:34PM (2/20/2009)
Alright so I'm Canadian, and let me give you a few words on what I think of this:
In Chrysler's current economic situation, this is the time when they should have been MOST prepared for a bunch of whoop ass to be opened up on them. I dunno about you, but when I know there's going to be a fight, I invite some of my friends along just in case the other guy does too.
Also, Canada does not have free healthcare. We have free medical services at hospital's, that is all. If we need a major operation, we pay. If we need to take an ambulance, we pay. If we need to eat hospital food, we pay. It's not like we're soooo lucky.
And on one last point, Chrysler did this to itself, and what this is is simply taking taking taking taking, and not giving back. You can only mooch for so long before the person bitch slaps you and takes your/their money back.
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Nick 9:16PM (2/20/2009)
Honestly even in the current economic condition at Chrysler, I dont feel bad at all with Canada slapping them with a 500 million dollar bill. What do you expect after avoiding settlement for several years, they would just forget about it?
For those of you upset that people tend to abuse our heath care, would you still have the same feelings towards it if you required and expensive cancer treatment? The heath system in Canada was never set up to limit anyone from using it, it was there to make sure that if help was needed it was there. As a tax paying citizen, the pros of the system outweigh its flaws. I have no problem allowing a few dollars from my pay a year to save one mans life, as everyone would do the same for me. Its there when you needed it, and no one can deny me from treatment. I would honestly move out of Canada if we ever lost our coverage.
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Mindorensis 9:45PM (2/20/2009)
Thanks :"(
I totally agree with you, as a physician-in-training
Steve 1:29AM (2/21/2009)
@ eatpusy...
Hey hey hey.... I live in a beer store. And it's an igloo. Alright? We cool? Moving on...
the vegas style guy 10:05PM (2/20/2009)
Who knew Canadians were such an angry bunch?
Is it just me or are a hella lot of the auto industry's problems traced back to Ceberus?
One more thing, where is this Canada you speak of?
(I couldn't resist, sorry!)
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caddy-v 12:43PM (2/21/2009)
Seems to me before the final sale of a company all taxes and liens have to be paid in full. So why isn't this Daimlers problem?
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axlewood 1:21PM (2/21/2009)
those 3rd word bum immigrants are what drives the Canadian economy.
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Potosi Joel 5:06PM (2/21/2009)
Give the whole thing to Canada and call it even.
The whole of Chrysler isn't worth a dime, let the PM fly down to DC and beg for billions every quarter.
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Albertasaurus 11:07PM (5/30/2009)
@eatpusy
"I remember a taxi driver (love the Lincoln Town Cars) telling me a joe earnin' 90k CAD is only bringin' home 2400 a month. "
If you believe this I have some nice ocean frontage property for sale in Saskatchewan you might be interested in.
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Chris 2:50PM (3/09/2009)
@caddy-V:
You're the only person on this whole post who actually caught it. Chrysler was essentially owned by Daimler through 07. Cerberus Capital Management took the primary stake after that, with Daimler still holding 34% of the stock iirc. Bottom Line,
***THIS IS DAIMLER'S FAULT THAT THEY ARE EVEN IN THIS MESS IN THE FIRST PLACE!!!***
Cerberus landed a diseased whale that, even though they got a few steriods (CANN-electronics) the Needles were infected, and Chrylser's Coffers were DRAINED to rebuild Mercedes-Benz. They pinched every penny they could, and It looks like they dodged major taxes as well.
Some people could even say "well the managers were american chrysler guys they could have spoke up-blah blah that kind of Non-cost-cutting was effectively administered out of them by their German masters of the time, and if it didn't stick they were "downsized". The rest just kept their heads down until it was over, because most wanted to keep their Jobs.
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