Determining The Strength Of A Tax Position

A strong tax filing position can advance your successful negotiation and communication with Canada Revenue Agency in transfer pricing disputes. Once a company's well-developed position is challenged, the most important first step is to then undertake, with counsel, a full review of the strength of the taxpayer's position.

PMR Law has extensive experience in the collaborative process of evaluating the strength and correctness of a company's tax position. Based in Calgary, Alberta, our lawyers can determine how effective our clients' transfer pricing policies are by applying our experience and knowledge from other cases.

Evaluating The Strength Of Position

The main concern for companies involved in transfer pricing disputes is, "Is there any merit to what CRA is saying?" In other words, is the pricing that was established in the company's financial statements and the reports of related party transactions able to be defended successfully?

The answer to that question lies in effective inquiry into all pricing information in relation to the transactions being questioned. Good counsel can engage advisors to most effectively support a taxpayer's arguments by gathering:

  • Comparable data from unrelated parties
  • Copies of market contracts for similar goods/services
  • Data on market sale prices and inventory costs
  • Data on related industry mark-ups
  • Use the data and critically analyze existing reports to ensure they can withstand the scrutiny of challenges

Effective Documentation Strategies

We assist corporations by bringing to the table experts who have ways of finding data that is often overlooked by advisors when they did their pricing analysis. Once a dispute arises, the first critical step is to:

  • Obtain relevant pricing information on comparable data on the provision of similar services and goods to those being challenged.
  • Identify the intangible aspect of a transaction. In cases we have worked on, corporate know-how in the form of patents, trademarks and corporate secrets are the drivers of proper price analysis.
  • Obtain a new analysis of the transfer price at issue by applying multiple methodologies to compare and contrast the conclusions arrived at.
  • Develop additional supporting evidence on why the transfer price being challenged is reasonable.

Speedy And Effective Resolutions

The lawyers of PMR Law appreciate the need to analyze the strength of your position at the outset. We analyze your original position and and then add new support for the existing prices as a springboard for a speedy and effective resolution of a transfer pricing dispute.

Orderly management and proper oversight within the taxpayer corporation of the resources needed to control the dispute, is the key to avoid prolonged conflict and excessive use of corporate personnel.

PMR Law uses efficient technology to co-ordinate the process of accumulation, analysis and presentation of information for the dispute. These steps co-ordinate the process of obtaining the information, and making the information easily understood by corporate management. We make use of innovative technologies to reduce the time and labour involved.

Justifying our Client's Position

The goal of PMR Law is to find the best way to effectively communicate our client's decisions on pricing. If CRA challenges the results in an audit, we will provide tailored legal strategies and options to justify our client's original tax position.

We Can Help You Develop Your Tax Position

Contact Shaun T. MacIsaac, Q. C. of PMR Law today at (403) 457-9600 or by email at [email protected] and find out how we can help.