01/17/2018 13:59 EST | Updated 01/17/2018 14:11 EST

Loblaws Accused Of Using Barbados Bank Subsidiary For Tax Avoidance

The dispute with Canada Revenue could cost the retailer as much as $404 million.

A Loblaws store is seen Monday, March 9, 2015 in Montreal.

TORONTO — Loblaw Companies Ltd. and the Canada Revenue Agency faced off in a Toronto court today, the latest in an ongoing battle involving allegations that the grocery giant's Barbadian banking subsidiary was misused for tax avoidance.

The case involving Barbados-based Glenhuron Bank Ltd. was the focus of the Tax Court of Canada hearing, which was largely procedural, ahead of a trial due to start on April 23.

The dispute, which began in 2015 after Loblaw Financial Holdings filed an appeal, could cost the grocery giant as much as $404 million including interest and penalties, according to its latest quarterly report.

Earlier on HuffPost Canada:

The CRA alleges in court filings that Loblaw Financial Holdings took steps to have Glenhuron appear to be a foreign bank in Barbados in order to circumvent the rules.

The federal government reassessed Loblaw's subsidiary for several taxation years as far back as 2001, and concluded that it should pay taxes on $473 million of Glenhuron's income, filings show.

A Loblaw spokesman says it has paid its taxes appropriately, and Glenhuron's income earned outside of Canada should not be taxable under federal policy and law.

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