MTU Maintenance Canada Limited v. Her Majesty the Queen

Date Closed

April 01, 2008

Lead Office


The taxpayer, MTU Maintenance Canada Ltd.  was engaged in the business of maintaining, repairing and overhauling commercial aircraft engines and selling parts. The taxpayer contracted with a non-resident to sell its services overseas. The non-resident obtained a number of lucrative contracts for the taxpayer, and the taxpayer paid the non-resident accordingly. The Minister of National Revenue assessed the taxpayer Part XIII tax with respect to payments to the non-resident. It was the taxpayer’s position that all the payments were for “services performed in connection with the sale of property or the negotiation of a contract.” As a result, it was the taxpayer’s position that the payments to the non-resident were exempt from Part XIII tax because they fell within the exception contained in the closing words of subparagraph 212(1)(d)(iii). Ultimately, the parties came to an agreement allocating the services between exemption services and taxable services. The Minister reassessed accordingly, and the taxpayer withdrew its appeal in April 2008.

McCarthy Tétrault LLP advised MTU Maintenance Canada with a team led by Ed Kroft.