Chrysler Hit With $500m Canadian Tax Lien
Reuters reports that Chrysler Canada has been charged with a $500m CD ($400m USD) tax lien as a result of a tax liability reassesment. According to the document filed in Canadian federal court, the Canada Revenue Agency notified Chrysler Canada in 2002 that it owed “substantial increases” in taxes “targeting the pricing of automobiles and parts that crossed the border between Chrysler Canada and its Detroit parent” for three years starting in 1996. The document does not reveal the amount that Chrysler owes the Canadian government, but the $500m CD lien was filed against Chrysler’s Brampton, Ontario, operations. The lien is though to be the largest ever filed by the Canadian government, and likely represents an even larger tax liability than the lien amount. Chrysler is seeking shelter from the assesment in the Canada-US Tax Treaty, and according to reports, the court dispute has been shelved while the various governments negotiate a bailout for the auto sector. Needless to say, another half-billion in liabilities doesn’t exactly do wonders for Chrysler’s viability.
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Actually, if it is from 1996 to 2002, then it is Damiler's bill to pay. Most M & A's I've seen have clauses that state that in the event of a debt, etc occuring after sale it is the responsibility of the seller to pay if it occured during their ownership. (Or something along this verbage)
I though we had "free-trade" between Canada and the US. What happened to that?
Call me crazy, but I think maybe it might be time for Magna to restructure and consider the Canadian made car thing again. How long are they really going to be profitable making power-trains for the "Big 3"? It's probably a long shot, but I'm sure they could get that off the ground if the market improves and they have innovative designs. The only thing is, they burn their bridges with whoever is left standing in America. That's like Shimano making whole bicycles. No one wants to support a competitor.