HALIFAX – A Cape Breton paper mill will have to stay open for prospective new owner Pacific West Commercial Corp. to take advantage of tax benefits hammered out in its weekend agreement with the province.
An aspect of the deal allows Pacific West, a subsidiary of Stern Partners Inc. of Vancouver, to move other assets into the mill, which will be known as Port Hawkesbury Paper.
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Pacific West could then use the $1 billion in tax losses racked up by the previous mill owner, NewPage, to reduce its corporate taxes.
Geoffrey Loomer, an assistant professor of tax law at Dalhousie University’s Shulich School of Law, says the tax code requires the original business carry on for profit or with a reasonable expectation of profit.
Loomer says the company could make modifications to improve the mill, but it couldn’t shut the operation down if it wanted to use the losses in the future.
Natural Resources Minister Charlie Parker says Pacific West’s capability of using past losses at the mill to keep future tax bills down should be a strong incentive to keep the mill running.
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