Cameco says its tax battle with the Canada Revenue Agency (CRA) might end up in Canada’s highest court.
The Saskatoon-based uranium mining company also reported a third-quarter loss on Wednesday as operations resumed at its Cigar Lake mine.
Cameco said it received notice on Oct. 30 that the CRA is seeking leave from the Supreme Court of Canada to appeal a lower court decision that found in favour of the company in an ongoing tax dispute.
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Cameco says Federal Court of Appeal upholds Tax Court ruling challenged by CRA
In June, the Federal Court of Appeal upheld a 2018 ruling from the Tax Court of Canada that centred on Cameco’s use of a subsidiary in Switzerland to sell and trade its uranium.
The dispute focused on Cameco’s marketing and trading structure involving foreign subsidiaries and the related transfer pricing methodology used for certain intercompany uranium sale and purchase agreements.
The agency contended it was a sham established to avoid Canadian taxes, while Cameco maintained it was for legal and sound business practices.
The ruling covers Cameco’s 2003, 2005 and 2006 tax years.
Cameco said it is entitled to a $5.5-million refund plus interest for instalments the company paid on previous reassessments issued by CRA for the 2003, 2005 and 2006 tax years.
The company said the Tax Court has awarded it $10.25 million for legal fees incurred and up to $17.9 million for disbursements.
Cameco president and CEO Tim Gitzel said it is disheartening that the CRA is looking to appeal after the two lower court decisions.
“Cameco’s position has prevailed at every stage of the legal process,” Gitzel said.
“If CRA feels the laws aren’t accomplishing what they want, then the government should change the laws moving forward and not pursue the same arguments over and over again before a different court and expect a different outcome.”
Gitzel said he remains confident in the company’s position and said if the SCC agrees to hear the appeal, it could take until the second half of 2022 for a decision to be rendered.
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Cameco losses mount to $53M in second quarter despite surge in revenues
The news comes as Cameco reported a net loss of $61 million in the third quarter, which was attributed to quarterly variations in contract deliveries and the temporary suspension of production at its Cigar Lake mine due to the COVID-19 pandemic.
“As expected, our results continue to be impacted by the proactive operational decisions taken earlier this year,” Gitzel said.
“We believe that the actions we have taken to slow the spread of the COVID-19 virus are prudent and reflect our values – placing priority on the health and safety of our employees, their families and their communities.”
Production started again at the mine in September and Gitzel said this will position Cameco as a provider of low-cost, safe and reliable uranium for carbon-free nuclear electricity generation
“We see demand for nuclear growing driven by an increasing focus on electrification and the recognition that to achieve this while still meeting clean-air and climate change goals, nuclear will be needed in the toolbox,” Gitzel said.
“And this is occurring precisely while there is growing uncertainty and risk around global uranium supply.”
— With files from The Canadian Press