In this article, we summarize the key transfer pricing changes we believe will most affect Canadian taxpayers and offer insights into what these taxpayers can expect moving forward. Specifically, we discuss:
- Changes to transfer pricing rules, and what the government’s proposed amendments could end up looking like.
- New interest deductibility limits, including what they’ll entail and who they’ll target.
- Hybrid mismatch rules and how they could deny some taxpayers significant tax benefits.
- New mandatory disclosure rules around reportable transactions, notifiable transactions and uncertain tax positions—and how this could lead to an influx of CRA audits.
- Enforcement policy changes, specifically leaving the door open for audits if taxpayers don’t disclose suspicious transactions or arrangements under the new disclosure regime.
- More intensive tax audit procedures, which could result in managers and employees submitting to verbal questioning by CRA auditors.
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Read the Canadian federal budget 2021-2022: Proposed transfer pricing measures and the impact on taxpayers here.