CALGARY,
AB, May 23, 2023 /CNW/ - Whitecap
Resources Inc. ("Whitecap") (TSX: WCP) announces that it has
received a letter (the "Proposal Letter") from the Canada
Revenue Agency (the "CRA") advising that, subject to
submissions by Whitecap, the CRA is proposing to reassess a former
subsidiary of Whitecap to deny non-capital loss deductions relevant
to the calculation of income taxes for the years 2018 and 2019.
In 2014, Whitecap acquired a private entity that held an
interest in certain oil and natural gas assets and which had
accrued non-capital losses in its business. The proposed
reassessment seeks to disallow the deduction of approximately
$494 million of these non-capital
losses under the Income Tax Act (Canada) for the years 2018 and 2019. If the
non-capital losses that have been claimed for the years 2018 and
2019 were ultimately disallowed, it is expected to result in an
estimated liability for the previous taxation years of
approximately $133 million, excluding
interest.
Whitecap will vigorously defend its tax filing position.
Whitecap has received advice from its tax advisors that it should
be entitled to deduct the non-capital losses and is of the opinion
that its tax filings to-date are correct. It is not expected that
the Proposal Letter will impact years other than 2018 and 2019.
Whitecap is preparing a response to the Proposal Letter and,
failing a resolution of the matter, the CRA may proceed to issue a
notice of reassessment. If the CRA reassesses Whitecap as described
in the Proposal Letter, Whitecap will have 90 days from the
issuance of the notice of reassessment to prepare and file a notice
of objection which would be reviewed by the CRA's Appeals Division.
At that time, Whitecap would be required to pay 50% of the assessed
tax liability and interest. If the CRA is not in agreement with
Whitecap's notice of objection, within a prescribed period,
Whitecap would have a right to appeal to the Tax Court of
Canada. If a notice of
reassessment is received, Whitecap currently estimates that the
ultimate resolution of the matter may take two to four years. If
Whitecap is ultimately successful in defending its position, then
any taxes, interest and penalties paid to the CRA would be refunded
plus interest, and if the CRA is successful then any remaining
taxes payable plus interest and any penalties would have to be
remitted by Whitecap.
Whitecap confirms that the proposed reassessment, if issued, is
not expected to affect Whitecap's long-term business strategy or
our current monthly dividend, even if the CRA's position was
ultimately upheld.
About Whitecap
Whitecap Resources Inc. is an
oil-weighted growth company that pays a monthly cash dividend to
its shareholders. Our business is focused on profitable production
growth combined with sustainable dividends to shareholders. Our
objective is to fully fund our capital expenditures and dividend
payments within funds flow. For further information about Whitecap,
please visit our website at www.wcap.ca.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press
release contains forward-looking statements and forward-looking
information (collectively "forward-looking information") within the
meaning of applicable securities laws. Forward-looking information
typically uses words such as "expect", "objective", "intend",
"estimate" or similar words suggesting future outcomes or
statements that actions, events or conditions "may", "would",
"could" or "will" be taken or occur in the future. In particular,
and without limiting the generality of the foregoing, this press
release contains forward-looking information with respect to: the
proposed reassessment of certain of our tax filings by the CRA and
the details thereof; our estimated tax liability for previous
taxation years if the CRA disallows non-capital losses previously
claimed and is ultimately successful; our intention to defend our
tax filing position; our expectation that the Proposal Letter will
not impact years other than 2018 and 2019; our estimate of the time
it may take to resolve any CRA reassessment; and our belief that if
the proposed reassessment is issued it is not expected to affect
our long-term business strategy or our current monthly dividend,
even if the CRA's position was ultimately upheld. The
forward-looking information is based on certain key expectations
and assumptions made by our management, including: the availability
and amount of the non-capital losses available to us; expectations
and assumptions concerning applicable tax laws; the maximum
potential amount that could be assessed as additional tax,
penalties and arrears interest to Whitecap by the CRA; and the
precedential value of historical Canadian tax case law. Although we
believe that the expectations and assumptions on which such
forward-looking information is based are reasonable, undue reliance
should not be placed on the forward-looking information because
Whitecap can give no assurance that they will prove to be correct.
Since forward-looking information addresses future events and
conditions, by its very nature it involves inherent risks and
uncertainties. These include, but are not limited to: imprecision
and uncertainty in estimates of tax pools, tax shelters and tax
deductions available to us; the interpretation of tax legislation
and regulations applicable to us; the risk that the CRA could elect
to challenge our tax fillings and that such challenge is successful
and that this outcome has a negative effect on the availability or
quantum of the non-capital losses; the risk that the tax impact to
us, in the event the non-capital losses are not available, is
materially different than those currently contemplated; that any
reassessment of our tax filings and the continuation or timing of
any such process is outside of our control; litigation risk
associated with a challenge to our tax filings; and changes to tax
legislation and administrative policies. Our actual results,
performance or achievement could differ materially from those
expressed in, or implied by, the forward-looking information and,
accordingly, no assurance can be given that any of the events
anticipated by the forward-looking information will transpire or
occur, or if any of them do so, what benefits that we will derive
therefrom. Management has included the above summary of assumptions
and risks related to forward-looking information provided in this
press release in order to provide security holders with a more
complete perspective on our future financial results and operations
and such information may not be appropriate for other purposes.
Readers are cautioned that the foregoing lists of factors are not
exhaustive. Additional information on these and other factors that
could affect our operations or financial results are included in
reports on file with applicable securities regulatory authorities
and may be accessed through the SEDAR website (www.sedar.com).
These forward-looking statements are made as of the date of this
press release and we disclaim any intent or obligation to update
publicly any forward-looking information, whether as a result of
new information, future events or results or otherwise, other than
as required by applicable securities laws.
SOURCE Whitecap Resources Inc.
