Glenn Chamandy, Gildan CEO, faces a $47m tax dispute with Revenu Québec over alleged "sham" trades
Glenn Chamandy, the executive who reclaimed his position at Gildan Activewear Inc. after a board dispute, now faces a new challenge from Canadian tax authorities, according to BNN Bloomberg.
Chamandy and his legal team are disputing with Revenu Québec over tax filings from years ago. The provincial tax agency seeks approximately $47m, which includes a $6.4m penalty against one of Chamandy’s numbered companies.
The controversy involves “straddle” trades, a strategy using forward foreign exchange contracts to create tax losses in one year and offsetting gains in the following year. Canadian taxpayers have used this method to reduce or defer income taxes, but tax authorities have challenged its legitimacy.
In Chamandy’s case, Revenu Québec disallowed the trading losses reported by one of his companies, claiming the foreign exchange contracts were “shams,” as stated in the documents.
In 2022, the Federal Court of Appeal ruled against similar straddle transactions, stating that those done solely to generate tax losses are not legitimate.
Chamandy, addressing the tax dispute in May, told La Presse, “I’m going to sit down with them and review everything, and we’ll see the result. I’m not running away.”
He did not respond to Bloomberg’s requests for comment, and his lawyer, Marie-France Dompierre, also declined to comment when contacted.
“Revenu Québec and the CRA are more and more aggressive on these types of transactions,” commented Yves Picard, a Quebec business law specialist, referring to the Canada Revenue Agency.
Another aspect of the case involves large transactions between Chamandy’s numbered companies in Canada and three companies based in the Bahamas. Chamandy owns a luxury golf course in the Bahamas.
In December, Chamandy was removed from his position by Gildan’s board due to a disagreement over succession and corporate strategy. However, major shareholders, led by Browning West LP, rallied to his side, successfully electing their own directors and reinstating Chamandy as CEO.
