#Canada #Toronto #Franco-Nevada #Cra #Tax Settlement

Franco-Nevada Corporation's Successful Tax Settlement with Canada

On September 11, 2025, Franco-Nevada Corporation announced a significant settlement with the Canada Revenue Agency (CRA), bringing closure to tax disputes related to reassessments from 2013 to 2019. The settlement centers on income taxation from Franco-Nevada's foreign subsidiaries, specifically Franco-Nevada (Barbados) Corporation and Franco-Nevada Mexico Corporation, S.A. de C.V., both of which operate outside Canada.

Background of the Settlement

The tax reassessments in question involved the application of transfer pricing rules, which serve to ensure that transactions between related entities across borders are conducted at arm’s length, reflecting fair market value. The CRA's initial actions had raised concerns for Franco-Nevada regarding potential tax implications on the income these subsidiaries generated. However, the settlement reached represents a strategic resolution that benefits both parties.

Franco-Nevada’s CEO, Paul Brink, expressed satisfaction with the outcome, emphasizing it as a pivotal move for the company's future. Under the terms of the settlement, Franco-Nevada will not owe any Canadian taxes on the foreign earnings generated by its subsidiaries for the specified tax years. This is a considerable relief for the company, which prides itself on managing its tax liabilities strategically.

Key Aspects of the Settlement

One of the pivotal elements of the settlement involves adjustments to the service fees that Franco-Nevada charges its subsidiaries. The adjustment will see an increase in the mark-up applied to the costs associated with services provided, changing from a range of 7-20% to an enhanced 30%. While this adjustment leads to an anticipated taxable income of C$1.4 million in Canada for the applicable tax years, the company expects that, thanks to available non-capital losses, it will not incur any additional cash tax liabilities related to this income.

Moreover, the penalties associated with transfer pricing that were referenced in the CRA's reassessments are set to be reversed, and interest charges will consequently be adjusted. Although the settlement is expressly applicable only to the years before 2019, the foundational transfer pricing principles established are believed to set a precedent for any similar future assessments.

The Impact on Franco-Nevada's Future

This settlement marks a significant step forward for Franco-Nevada, as it clears a potential obstacle that could have hindered the company's investment strategies and global growth ambitions. With the tax dispute resolved, Franco-Nevada can refocus its efforts on acquiring high-quality assets and enhancing its diverse portfolio, a strategy that has already seen the company engaging in approximately $3 billion worth of transactions over the past 18 months.

Brink remarked, "This settlement not only provides clarity and peace of mind but also solidifies our position as a leading player in the sector. It reinforces our commitment to delivering shareholder value while continuing to explore growth opportunities in the mining industry."

Corporate Profile

Franco-Nevada Corporation is recognized as a premier gold-focused royalty and streaming company featuring the largest and most diversified portfolio of cash-flow-generating assets. The company's business model strategically limits exposure to cost inflation while providing investors with appealing gold price and exploration optionality. The firm utilizes its robust free cash flow to expand its portfolio and ensure competitive dividend payments. As a result, it boasts a solid trading reputation under the FNV emblem on both the Toronto and New York Stock Exchanges, reinforcing it as the go-to gold investment opportunity.

In conclusion, the resolution of the tax dispute with the CRA not only enhances Franco-Nevada’s fiscal landscape but also strengthens its growth trajectory in a highly competitive market. Investors can look forward to the company's continued evolution as it embarks on new ventures underpinned by sound financial management and operational excellence.