Target’s failed operations in Canada will translate to some US$1.6 billion in tax breaks for its Minnesota-based retailer, documents filed with the U.S. Securities and Exchange Commission showed.

“We have recognized a tax benefit of $1.6 billion in discontinued operations, which primarily relates to the loss on our investment in Canada and includes other tax benefits resulting from certain asset write-offs and liabilities paid or accrued to facilitate the liquidation,” documents filed by Target on March 13 said.

The failed Canadian business, which involved the closure of 133 stores in Canada, 17,600 lost jobs and millions of dollars in unpaid bills, was a "strategic shift," the filings further said. Target announced the shutdown on January 15. The Canadian division filed for bankruptcy protection on the same day.

Stavros Gavrilidis, a pharmacist at the Target store in Windsor, Ont., told the Globe and Mail every penny of the US$1.6 billion tax breaks should be given back to creditors. Target Canada owes hundreds of thousands of dollars to its franchised pharmacists. Its total debt to its myriad of creditors amount to a whopping C$5 billion [A$5 billion]. Its owes a varied group lots of money, including Chapman’s Ice Cream, Coca-Cola Canada, even the City of Winnipeg, as well as the central Ontario city of Barrie. It also owes the federal Canada Revenue Agency millions in taxes, as well as provincial governments.

In its filing, Target said majority of the tax benefits were realised in the first quarter of 2015. It stressed it expects the amount to realize substantially all of the remainder in 2015. The development is definitely good news for Target USA and its shareholders. However, vendors are sure to get pissed off to realise that Target has even made a gain “on the backs of Canadian suppliers and the Canadian economy,” Melvyn Solmon said. He represents ISSI Inc., a baby goods supplier of Target Canada.

Target Corp’s losses from its Canadian retreat amount to an estimated $5.1 billion. The Canadian unit is in court working the details of its departure. Its closure impacts not only workers but landlords and suppliers as well, among others.

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