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ARTICLE · 09 MAY 2024

Transfer Pricing 2024

Osler, Hoskin & Harcourt LLP
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The primary source of Canada's transfer pricing rules is Section 247 of the Income Tax Act (ITA). Under Subsection 247(2) of the ITA, transactions...

CanadaTax
Amanda Heale
Amanda Heale
Edward Rowe
Edward Rowe
Mark Brender
Mark Brender
Kaitlin Gray
Kaitlin Gray
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1. Rules Governing Transfer Pricing

1.1 Statutes and Regulations

The primary source of Canada's transfer pricing rules is Section 247 of the Income Tax Act (ITA). Under Subsection 247(2) of the ITA, transactions (or series of transactions) in which Canadian taxpayers and non-arm's length non-resident persons are participants must adhere to terms and conditions that are comparable to those that would have been established if the participants were dealing at arm's length. If the terms and conditions of these transactions do not adhere to the arm's length principle, adjustments are to be made for purposes of the ITA.

When the Canada Revenue Agency (CRA) makes an upward transfer-pricing adjustment under Subsection 247(2) of the ITA (known as the "primary adjustment"), there may be a secondary adjustment subject to non-resident withholding tax. This secondary adjustment is based on the premise that a benefit has been provided to a non-resident person due to the

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