[8] By 1990, generic drug manufacturers such as Apotex and Novopharm were able to acquire ranitidine on the open market at prices significantly less than Glaxo Canada was paying under its 1983 agreement.

On 30 May 2008, the TCC allowed the appeals, ordering the s. 69(2) and Part XIII assessments to be returned to the Minister for reassessment with respect to a minor pricing adjustment.

[14] He also ruled that the Part XIII assessments for withholding tax were essentially correct, but subject to a minor pricing adjustment with respect to the drug's granulation.

In his ruling, Nadon JA stated the trial judge had erred in the following respects: The Singleton test applied to a different part of the Act under different circumstances,[19] and the consideration of what is reasonable must be governed by the standard noted in Gabco Ltd v Minister of National Revenue,[20] where Cattanach J stated: It is not a question of the Minister or this Court substituting its judgment for what is a reasonable amount to pay, but rather a case of the Minister or the Court coming to the conclusion that no reasonable business man would have contracted to pay such an amount having only the business considerations of the appellant in mind.

[24] According to the Crown, only those circumstances that would be relevant to parties bargaining at arm‟s length for a particular good should be considered in the analysis,[25] which it asserted was supported by the SCC's rulings in Singleton and Shell Canada Ltd. v.

While there are undoubtedly components of intellectual property embedded in the price of the tangible good, it is not Canadian law or practice to segregate and separately tax the discrete elements.

As to the applicability of the OECD guidelines, GSK stated that there was no dispute between the parties that the issue in question is solely the price of the tangible good rather than its characterization.

[34] It was also noted that the issue as to whether the purchase price includes compensation for intellectual property rights granted to Glaxo Canada had not been specifically argued before the SCC, and could still trigger potential further liability for Part XIII withholding tax.

However, it has been contended that the quoted words are implicit in the comparative exercise mandated by the explicit adoption of the arm's-length principle in subsection 247(2),[53] and the Tax Court of Canada has held that GlaxoSmithKline's reasoning continues to apply to s. 247 cases.

These errors may require having the court overrule its decision in order to properly consider the Minister's question about the appropriateness of the reasonable business person test.