CRA rules against new owners of Nova Scotia paper mill

There is a possible setback in the deal to reopen the former Newpage paper mill in Port Hawkesbury.

The mill's new owner had applied to the Canada Revenue Agencyfor tax breaks using losses incurred by the mill's previous owners.

Sources tell CBC News the tax ruling went against Pacific West Commercial Corporation.

Nova Scotia's Minister of Natural resources, Charlie Parker, says the province is negotiating with Ron Stern, the new owner, on terms to reopen the mill.

The deal will involve no new provincial money, Parker said Friday at a news conference in Pictou.

But the province will hand over some or all of the provincial tax Stern will now have to pay as a result of the CRA ruling, which could be between $6 million and $7 million, he said.

The province has already committed $124 million as part of a package to reopen themill, which included money to buy land for production and a $40-million repayable loan.

Now, Parker says the province is going to renegotiate that to provide more assistance to the company.

That doesn't mean the province will give more money, but it will rebate some or all of the provincial tax the company is now obligated to pay.

Parker says more details will be released at a briefing Monday.

Meanwhile, Pacific West has rejectedan offer from Richmond County to pay $1.3 million per year in municipal tax, rather than the $2.6 million it had been paying.

The two sides will return to court on Monday.

Victor David, the deputy warden for the county,says it was an attempt to get a fair and equitable settlement for the mill and the people of Richmond County.

In a news release, Pacific West says it has an agreement with the province about ways to "mitigate the impact of not having the tax ruling, so that the mill can be restarted on a sound financial basis, and without Nova Scotia Power becoming a shareholder."

"The restart will require amendments to the existing UARB approval to reflect the absence of a tax ruling, but PCWW will not be seeking any concessions with respect to the otherwise approved tariff."

Pacific West says the process of ramping up to restart the mill is continuing as planned, with hopes of starting production by the end of September.