CRA Transfer Pricing Audit — Montreal CPA Firm Near You: Arm’s-Length, OECD-Compliant Defense

A CRA Transfer Pricing Audit examines whether transactions between your Canadian corporation and its foreign or related affiliates are conducted at arm’s-length — meaning the pricing reflects what independent parties would reasonably agree to. These audits affect intercompany sales, service fees, royalties, loans, intellectual-property arrangements, and cost-sharing agreements.
Mackisen CPA Montreal prepares complete OECD-aligned transfer-pricing files and economic analyses to defend your pricing, prevent penalties, and avoid profit reallocations that can reach millions.

A transfer pricing audit is one of CRA’s most technical reviews. Without proper contemporaneous documentation, CRA can impose a 10% penalty under ITA s.247(3), even if pricing is reasonable.

Legal Foundation

Income Tax Act s.247 — the arm’s-length transfer-pricing rule.
Income Tax Act s.247(4) — requires contemporaneous documentation on demand.
OECD Transfer Pricing Guidelines — global standard for functional analysis and pricing methods.
Jurisprudence: GlaxoSmithKline Inc. v. Canada (2012 SCC) — CRA must consider real-world commercial context when testing arm’s-length prices.

Learning insight: Transfer pricing is about economic logic, not just invoices. CRA must see why your pricing makes sense.

Why CRA Conducts Transfer Pricing Audits

CRA’s Transfer Pricing Review Division selects files when it detects:
• significant intercompany charges
• low Canadian profits but high foreign profits
• management fees lacking service descriptions
• loans to or from foreign affiliates at non-market interest rates
• royalty or licensing fees without valuation evidence
• missing or incomplete T106 filings
• multi-year losses in Canada with profitable affiliates abroad

Learning insight: CRA audits profit alignment. Your CPA must prove your allocation reflects real value creation.

CRA’s Transfer Pricing Audit Process

1. CRA issues a request for contemporaneous documentation.

2. CRA conducts a functional analysis (functions, assets, risks).

3. CRA tests pricing using CUP, TNMM, Cost-Plus, or Resale Price Method.

4. CRA compares your margins to industry comparables.

5. CRA issues proposed adjustments if price falls outside arm’s-length range.

6. Mackisen CPA responds with economic studies, benchmarking, and legal analysis.

7. CRA finalizes or withdraws adjustments depending on evidence.

Learning insight: Transfer pricing audits are negotiations backed by data. Good data wins.

Mackisen CPA’s Transfer Pricing Defense Strategy

• construct full functional and risk-analysis files
• prepare OECD Master File and Local File documentation
• perform benchmarking using reliable international databases
• justify pricing with accepted methods (CUP, TNMM, CPM, RPM)
• prepare economic and legal memoranda
• defend interest rates with interbank yield-curve analysis
• document intellectual property valuation and royalty logic
• respond to CRA through structured CPA audit briefs
• prepare appeals when necessary

Learning insight: CRA respects rigor. Mackisen CPA provides economic rigor, legal rigor, and documentation rigor — all at once.

Common CRA Transfer Pricing Adjustments

• disallowed management fees (no service proof)
• interest adjustments on intercompany loans
• increased income reassigned to Canada
• denied royalties due to lack of IP valuation
• markup adjustments on shared-service or cost-sharing arrangements
• penalties for inadequate documentation

Learning insight: The biggest adjustment risk comes from missing documentation, not incorrect pricing.

Real-World Results

• A multinational distributor avoided a $2.4M adjustment when Mackisen CPA demonstrated that Canadian functions were routine and aligned with a TNMM benchmark.
• A tech company reversed CRA’s interest-rate adjustment after we provided market-based loan comparables.
• A pharmaceutical affiliate avoided documentation penalties when we built compliant Local and Master Files retroactively.

Learning insight: CRA negotiates when your file is stronger than theirs — we make sure it is.

SEO Optimization and Educational Value

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Secondary keywords: intercompany pricing, transfer pricing documentation, CRA multinational audit, TNMM analysis, management fee audit defense

Learning insight: Transfer pricing is technical — presenting it clearly builds authority with both clients and CRA.

Why Mackisen CPA Montreal

Mackisen CPA Montreal brings 35+ years of audit-defense, transfer-pricing, and international tax experience. Our bilingual CPA and economic-analysis team creates defensible pricing structures backed by law, data, and documentation.
We don’t just defend your pricing — we prove its logic and ensure it survives CRA, OECD, and cross-border scrutiny.

Learning insight: Transfer pricing is global, but compliance is local. Mackisen CPA bridges both.

Call to Action

If CRA or Revenu Québec has requested your transfer-pricing file, issued a T106 inquiry, or questioned intercompany pricing, respond immediately.
Contact Mackisen CPA Montreal for a full OECD-aligned transfer-pricing defense package.
Phone: 514-276-0808 | Email: info@mackisen.com | Website: mackisen.com

Learning conclusion: CRA Transfer Pricing Audits test value creation, documentation, and commercial reality. Mackisen CPA Montreal ensures your pricing is arm’s-length, your documentation complete, and your defense indisputable.