OTTAWA, (Reuters) – Income earned by an offshore subsidiary of Canadian grocery retailer Loblaw Companies Ltd is exempt from tax, Canada’s Supreme Court ruled on Friday. This decision could impact other businesses.

This case involved a Barbados-based bank that was linked to the firm. Loblaw successfully claimed that the bank, which was based in Barbados and doing business with many other entities, was not Canadian-regulated. Therefore its income shouldn’t be subject to tax.

The government lawyers stated that if the case was lost, it would put at risk the collection of over C$1 Billion ($782 MILLION) annually in taxes. This is despite the fact that similar deals were being made by other companies. Ottawa maintained that the bank, which was controlled by Loblaw’s foreign affiliate, should be subject to income tax.

Canadian tax law provides an exception to offshore subsidiaries, which can be foreign banks or have more than five employees and maintain an unrestricted relationship with their parent.

According to the court, Loblaw could “rely on the financial institution exemption”.

Loblaw shut down the bank in 2013, and it already had incurred C$367million to pay costs for the loss of the ruling.

($1 = 1.2794 Canadian dollars)