Olympia Financial Group Inc.

Olympia Financial Group Inc.

April 08, 2015 18:12 ET

Olympia Financial Group Inc. Announces Quarterly Dividend; Receives Adverse Notice From CRA

CALGARY, ALBERTA--(Marketwired - April 8, 2015) - Olympia Financial Group Inc. (TSX:OLY) announces its Board of Directors has declared a quarterly cash dividend on its common shares of $0.65 per common share. The dividend will be payable on April 30, 2015 to shareholders of record as at April 21, 2015. The ex-dividend date is April 17, 2015.

Olympia Financial Group Inc. designates the entire amount of this taxable dividend to be an "eligible dividend" for purposes of the Income Tax Act (Canada), as amended from time to time. Please contact your tax advisor if you have any questions with regards to the designation of the eligible dividend.

Olympia today received a letter (the "CRA Notice") from Canada Revenue Agency ("CRA") wherein the CRA advises that they are proposing to issue assessments against Olympia Trust Company ("OTC") for withholding taxes owing in accordance with Section 116(5) of the Income Tax Act (Canada) (the "Tax Act") as a result of certain OTC clients purchasing securities from a non-resident utilizing funds in their self-directed registered plans in the years 2000 through 2002. The CRA Notice provides that OTC is liable to pay CRA an aggregate of $1.9 million (including penalties of $173,208.43) in connection with these annuitant transactions. The CRA Notice also notes that interest may be payable on the amounts owing but the CRA acknowledges that a substantial amount of time has passed since the date of the subject transactions and have invited us to make submissions requesting interest be waived in the circumstances.

As previously announced on December 19, 2014, OTC did receive an adverse tax ruling from the Tax Court of Canada declaring OTC to be a "purchaser" for the purposes of section 116(5) of the Tax Act, whereby OTC is liable for certain withholding tax obligations relating to share sale transactions completed by certain self-directed registered plans to non-residents from 2001 to 2004. At this time, we understand the new CRA Notice to include additional annuitants that completed share purchases from the same group of non-residents and that these annuitants were not covered under the previous notices of assessment received in 2010.

At the present time, OTC (on the advice of legal counsel) is appealing the tax ruling to the Federal Court of Appeal as we do not agree that OTC is a "purchaser" for the purposes of Section 116(5) of the Tax Act. We intend to request that the CRA hold the notices of assessment contemplated in the CRA Notice in abeyance until the appeal is determined. In the event OTC is successful on its appeal and the Federal Court of Appeal concludes OTC not to be a "purchaser" under Section 116(5) of the Tax Act, it is likely OTC would be entitled to a return of $1.27 million previously paid to CRA in 2010 and would not have to pay the $1.9 million contemplated in the CRA Notice. In the event OTC is unsuccessful on the appeal, it is unlikely that OTC would recover the amounts previously paid in 2010 and would likely be obligated to pay the amounts contemplated by the CRA Notice.

As all of the transactions contemplated by the CRA Notice relate to securities transactions completed by OTC annuitant clients, OTC is proceeding with legal action against such clients to enforce its contractual right to be indemnified for the tax liabilities from the annuitants that completed these transactions. In addition, Olympia believes this to be an insured event and will be making a claim pursuant to our insurance policy. Olympia has $7.0 million of insurance coverage for tax withholding errors. The insurance policy has a $1.0 million deductible.

Further, Olympia notes that the subject transactions are all connected to a fraudulent investment scheme designed to, among other things, deceive Canadian trust companies to believe that the vendors were not offshore entities (as concluded by the Court of Queen's Bench of Alberta). Further, we understand that up to six (6) other financial institutions did advance registered plan funds in connection with this scheme, and like OTC, these financial institutions did not withhold funds in accordance with Section 116(5) of the Tax Act.

At the present time, the financial impact of the CRA Notice on Olympia is not yet certain as the financial impact depends on various factors, including, among others, the results of OTC's appeal to the Federal Court of Appeal, insurance coverage for this event and recovery from annuitants from our indemnities.

About Olympia Financial Group Inc.

Olympia Financial Group Inc. ("OFGI") conducts most of its operations through its wholly- owned subsidiary Olympia Trust Company, a non-deposit taking trust company. Olympia Trust Company is licensed to conduct trust activities in Alberta, British Columbia, Saskatchewan, Manitoba, Quebec, Newfoundland and Labrador, Prince Edward Island, New Brunswick and Nova Scotia. Olympia Trust Company administers self-directed registered accounts and offers foreign currency exchange services. OFGI also offers private health services plans through its wholly-owned subsidiary Olympia Benefits Inc. and operates an ATM business through its wholly-owned subsidiary Olympia ATM Inc.

OFGI's common shares are listed on the Toronto Stock Exchange under the symbol "OLY".

Contact Information

  • Olympia Financial Group Inc.
    Rick Skauge
    President and Chief Executive Officer
    (403) 261-0900

    Olympia Financial Group Inc.
    Gerhard Barnard
    Vice-President, Finance and Chief Financial Officer
    (403) 261-0900
    (403) 265-1455 (FAX)