CRA Transfer Pricing Audit — Montreal CPA Firm Near You: OECD-Aligned Defense Files

A CRA Transfer Pricing Audit is one of the most advanced and technically demanding audits a Canadian corporation can face. It targets cross-border transactions between related companies — testing whether goods, services, loans, or royalties are priced at arm’s length.
Mackisen CPA Montreal helps corporations defend their intercompany pricing with full OECD-compliant documentation, ensuring every transaction withstands scrutiny from both CRA and international tax authorities.

Legal Foundation

Law: Income Tax Act s. 247 (Transfer Pricing Rules); OECD Transfer Pricing Guidelines (2022 Edition).
Jurisprudence: GlaxoSmithKline Inc. v. Canada (2012 SCC) — confirmed that transfer pricing must reflect arm’s-length commercial reality, not arbitrary cost-based formulas.

Learning insight: CRA doesn’t dispute that your price exists — it disputes whether it would exist between independent parties. Mackisen CPA ensures the answer is always yes.

Why CRA Targets Transfer Pricing

CRA’s Transfer Pricing Review Division monitors high-volume or high-value related-party transactions, including:

• Sale of goods to or from foreign affiliates.

• Cross-border management or technical-service fees.

• Intercompany loans and interest rates.

• Licensing, royalties, and use of intellectual property.

• Cost-sharing and R&D reimbursements.

• Shared marketing or head-office allocations.

CRA focuses on corporations with operations in low-tax jurisdictions or high intercompany deductions relative to revenue.

Learning insight: Every cross-border invoice is a potential audit flag — unless it’s priced at arm’s length, explained in writing, and backed by evidence.

CRA’s Transfer Pricing Audit Process

1. Risk Assessment: CRA analyzes your T106 filings and related-party notes for inconsistencies.

2. Information Request: CRA demands contemporaneous documentation (Master File, Local File, comparables).

3. Functional Analysis: CRA studies your business functions, assets, and risks across entities.

4. Benchmark Review: CRA tests pricing against comparable independent transactions.

5. Adjustment Proposal: CRA may increase or decrease income to match arm’s-length standards.

6. Penalty Consideration: CRA applies a 10% penalty if contemporaneous documentation is missing or inadequate.

Learning insight: Transfer pricing is not about accounting — it’s about storytelling with data, economics, and law. Mackisen CPA writes that story for CRA in your favor.

Mackisen CPA’s Transfer Pricing Defense System

1. OECD-Compliant Documentation: Prepare Master File (group-level) and Local File (entity-level) documentation to meet ITA s.247(4) standards.

2. Comparability Analysis: Identify external benchmarks and independent transactions proving arm’s-length pricing.

3. Functional and Risk Mapping: Document each entity’s assets, risks, and decision-making authority.

4. Economic Justification: Prepare transfer-pricing studies using tested methods (TNMM, CUP, Cost Plus, or Resale Price).

5. Audit Response and Negotiation: Represent your company directly with CRA Transfer Pricing Specialists.

Learning insight: CRA audits transactions — Mackisen CPA defends business purpose. The difference saves you tax, penalties, and years of litigation.

Key CRA Focus Areas

• Management Fees: CRA requires proof of service provided, cost base, and benefit received.

• Intercompany Loans: CRA tests interest rates against market comparables and applies deemed-benefit rules.

• Intellectual Property (IP) Royalties: CRA reviews valuation models and ownership of intangibles.

• Procurement and Distribution Centers: CRA challenges profit allocation in low-tax jurisdictions.

• Cost-Sharing Agreements: CRA ensures costs match proportionate benefits.

Learning insight: CRA uses OECD’s 3-step method — delineate, analyze, and test — to reconstruct your pricing. Mackisen CPA applies the same method, but better.

Real-World Case Studies

1. A Quebec manufacturer faced a $1.2M reassessment for “excessive” management fees to its European parent. Mackisen CPA demonstrated that services provided exceeded the cost base and secured a 100% withdrawal of adjustments.

2. A software group avoided double taxation when we coordinated with U.S. counsel to prove symmetric pricing under the Canada–U.S. Tax Treaty.

3. A life sciences firm maintained its 15% royalty deduction after Mackisen CPA presented a valuation benchmark from OECD database comparables.

Learning insight: CRA accepts solid data over arguments — and we turn data into defense files that speak their language.

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Learning insight: Transfer pricing is a test of precision — in law, accounting, and communication. Mackisen CPA ranks high because it teaches while it protects.

Why Mackisen CPA Montreal

Mackisen CPA Montreal has over 35 years of experience representing cross-border corporations before CRA and Revenu Québec. Our bilingual team of CPAs and tax lawyers builds documentation that meets both Canadian and OECD standards. We don’t just prepare reports — we build defensible narratives supported by comparables, economics, and governance proof.

Learning insight: Transfer pricing is global — but compliance is local. Mackisen CPA Montreal ensures both align perfectly.