Transfer Pricing : Tax tips

Transfer pricing documentation prepared for the requirements in other jurisdictions not acceptable

In most, if not all, cases transfer pricing documentation prepared for the requirements in other jurisdictions, including the U.S., will not meet the Canadian documentation requirements. Taxpayers need to have transfer pricing documentation in place to support their inter-company transfer prices and this documentation must adequately address the contributions of the parties, in particular the Canadian entity. Failure to provide transfer pricing documentation within 3 months of the CRA's request, even by one day, will give rise to the 10% transfer pricing penalty.

Transfer pricing documentation

Canadian taxpayers need to have transfer pricing documentation in place to support their inter-company transfer prices and this documentation must adequately address the contributions of the parties, in particular the Canadian entity. The CRA (the Canadian income tax department) indicated that deficiencies have resulted in penalties being applied.