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ARTICLE · 22 MAY 2017

The Sifto Decision — Is The Minister Bound By MAP Settlements?

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On March 10, 2017, the Tax Court of Canada ("TCC") delivered its decision in Sifto Canada Corp. v. The Queen1 regarding the legal effect of a transfer pricing settlement reached under the Mutual Agreement...

CanadaTax
David Hill
David Hill
Jim Wilson
Jim Wilson
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On March 10, 2017, the Tax Court of Canada ("TCC") delivered its decision in Sifto Canada Corp. v. The Queen1 regarding the legal effect of a transfer pricing settlement reached under the Mutual Agreement Procedure Article ("MAP Article") of the Canada – United States Tax Convention ("Treaty'). In Sifto, Justice Owen overturned the Canada Revenue Agency's ("CRA") transfer pricing adjustment on the basis that the CRA was bound by an earlier MAP settlement, which established the arm's length values of the intercompany transactions in question. 

The Sifto case involved a unique situation where the CRA transfer pricing adjustments that were the subject of the MAP settlement arose as a consequence of a voluntary disclosure. Subsequent to the voluntary disclosure and MAP settlement, the CRA conducted an audit of the same taxation years and raised transfer pricing adjustments. The CRA's ability to issue reassessments resulting from this subsequent audit was the issue

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