OTTAWA - The Supreme Court of Canada has sided with Loblaw Financial Holdings in a dispute over the tax treatment of a subsidiary the company ran in Barbados.

In a 7-0 ruling today, the top court says Canadian provisions at issue in the case did not apply to the company, Glenhuron Bank Ltd., meaning tax on its income was not payable in Canada.

The minister had issued reassessments to Loblaw Financial that required it to pay tax on Glenhuron's income for several years on the grounds it fell under the provisions.

The federal Tax Court agreed with the minister in 2018 that Glenhuron's income did not qualify for an exclusion afforded to foreign banks.

The court concluded that Glenhuron conducted business principally with affiliated corporations, not parties with whom it was dealing at arm's length, as required by the legislation.

In its unanimous decision, the Supreme Court concluded the vast majority of business was conducted between Loblaw Financial's foreign affiliate and arm's-length parties, so the exception in the law did in fact apply.