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April 21, 2009 No. 2009-01 |
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Time Limits for Waivers and Transfer Pricing Reassessments Now in Synch
If your company is involved in an ongoing transfer pricing audit, you should be aware of a welcome recent tax law change to harmonize the time limit during which you can file a waiver of the seven-year time limitation for reassessments arising from transfer pricing transactions. This measure is intended to ensure consistency in the availability of waivers for reassessments subject to the normal reassessment period and those subject to the extended reassessment period for transfer pricing transactions.
As a result, for reassessments, including transfer pricing reassessments, you may now file a waiver within three years after the end of the normal reassessment period.
Background The tax rules allow the CRA to make a reassessment within three years after the end of the normal reassessment period if the reassessment arose from a transaction involving a taxpayer and a non-resident person with whom a taxpayer was not dealing at arm's length. In practice, transfer pricing audits by the CRA often ran up against this seven-year time limit for reassessment, and taxpayers often were unable to file waivers to extend the time limitation period and thus avoid a potentially arbitrary reassessment.
Waiver period extended
This change has been requested by the transfer pricing community for over ten years and, most recently, by the Advisory Panel on Canada's System of International Taxation (for details, see Transfer Pricing 60 Seconds 2008-11 dated December 22, 2008).
Note that the tax rules were also amended to allow the CRA to reassess a taxpayer who has filed a waiver within this three-year period.
For details, please contact François Vincent, National Leader, Canada, Global Transfer Pricing Services, and Partner of Moskowitz & Meredith (M+M) law firm affiliated with KPMG LLP, or your KPMG adviser, or any of the following:
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Information current to April 9, 2009. The information contained in this Transfer Pricing 60 Seconds is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.
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