Canada: Audit exposures and remedies

Ari Kashton, Soberman LLP, Toronto

Proactive planning and preventative procedures can save big headaches and expenses, but without proper policies and documentation in place, transfer pricing audits can result in long and costly corporate headaches. Even if the 10 percent pricing adjustment penalty (plus interest) is not applied, a transfer pricing audit can be costly in terms of Part XIII tax, remedial documentation costs, management time and professional time.

Transfer pricing continues to be an area of great concern to the Canada Revenue Agency (CRA). In fact, to ensure that Canada receives its fair share of tax on any international business conducted by related parties, the CRA employs approximately 500 designated international tax auditors. As a result, companies of virtually any size can find their international related party transactions under review…

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