BUSINESS

Target Corp to get US$1.6-billion tax break for its exit from Canada

03/19/2015 11:14 EDT | Updated 05/19/2015 05:59 EDT
TORONTO - Target Corp.'s swift exit from Canada will reap about US$1.6 billion in tax breaks for the retailer in the United States, according to documents filed with the U.S. Securities and Exchange Commission.

The Minneapolis, Minn.,-based company said it had already recognized the majority of the tax benefits in first-quarter filings and expects to book most of the rest before the end of 2015.

The tax breaks help offset pretax losses of $5.1 billion that were booked on its failed Canadian launch.

"Our Canada exit represents a strategic shift in our business," the company said in the documents filed March 13.

Target Corp. announced in January that it would close all 133 Canadian stores, most which opened in 2013 in phases beginning in Ontario, saying it would take years for the Canadian operations to turn a profit.

The retailer has been in court to iron out the details of its departure, dealing with a variety of creditors that include landlords, suppliers and others impacted by the closures.

Liquidation companies have been overseeing the sale of Target's inventory since last month.

Other issues outlined in the SEC filing include costs of a data breach in December 2013 that exposed details on as many as 40 million credit and debit card accounts.

Target Corp. said it booked $61 million of expenses in fiscal 2013 and another $191 million for fiscal 2014.

On Thursday, a Minnesota judge endorsed a settlement in which Target Corp. will pay $10 million to settle a class-action lawsuit over the massive data breach.

People affected by the breach can file for up to US$10,000 with proof of their losses, including unauthorized charges, higher fees or interest rates and lost time dealing with the problem.

A spokeswoman for Target Corp. said the class-action settlement covers only U.S. citizens and not Canadians who were affected by the breach.