The November 4, 2025, Canadian federal budget1
introduced new Canadian transfer pricing legislation containing the
most consequential change since 1997. The amendment has something
for everyone as a part response to the Cameco2
transfer pricing fiasco, part alignment with O.E.C.D. guidance, and
part harmonization with treaty partners.
In reply to the government's loss in Cameco, paragraphs
247(2)(a), (b), (c), and (d) of the Income Tax Act3 are
replaced by a single paragraph 2.02. Transaction pricing and
transaction recharacterization are now variations on a controversy
theme focused on "the quantum or nature of the amounts * * *
that would have been determined if arm's length conditions in
respect of the transaction or series had applied" ruling out a
trite response as a defense. To get there, we will now speak of
"actual conditions" when we mean what a company did in
contrast to "arm's length conditions," with newly
codified reference to the O.E.C.D. Guidelines
