Effective Defences For Audits
When Canada Revenue Agency audits a company’s transfer prices, they often suggest that adequate profits were not reported in Canada. The logical basis for the adjustment sought by CRA in its reassessment is that the taxpayer should have reported more of the economic activity of the taxpayer in Canada.
Transfer pricing is the establishment by a taxpayer that the transfer pricing that was followed was an arm’s length price, which means that the Canadian tax authorities have been paid their fair share of the profits.
PMR Law, and the experts we engage, have experience in communicating why the transfer prices selected were reasonable. Once your existing advisors have had their work challenged, PMR Law invites taxpayers to seek its services for a second opinion. We can provide a communications strategy to explain why the pricing should be accepted, and the reassessment vacated.
Experienced Legal Positions
While taxpayers involved in transactions with foreign affiliates all have accounting and audit advisors, this is only enough to prepare adequate compliance documents. Once a reassessment is issued, taxpayers need to retain a firm of lawyers to gather together the most efficient team for managing the disputes.
It is important to thoroughly review whatever issues or considerations may have been missed by the company when it filed its tax returns. PMR Law engages consultants that will investigate alternate methodologies. You are not stuck with the information you had at the time the pricing was established.
Receiving advice from experienced professionals who were not involved in creating the initial tax issue is essential for a company to create a stronger, more effective defence.
A Fresh Perspective
The information CRA base their conclusions on is, in many cases, prepared by a company’s internal or external compliance, tax and audit advisors. While it may be difficult for advisors to accept that the taxpayer may have made an error in representing their profits to CRA, this is sometimes the problem. It is important to have new eyes looking at an internal decision that was usually made years before the reassessment.
PMR Law offers extensive experience in the management of transfer pricing disputes, and the filing of objections to reassessments to provincial and federal Canadian tax authorities.
We offer our services to clients across Canada. PMR Law provides legal guidance, analysis and strategies for companies to pursue and defend pricing calculations.
Advocating The Taxpayer’s Point Of View
PMR Law brings to task its past experience in transfer pricing advice and litigation. We have advised taxpayers in various industries. The analysis of the profits of a manufacturing company is very different from the analysis of the profits of a service provider.
There are complex methodologies that a taxpayer must follow under the requirements of subsection 247(2) of the Income Tax Act. These vary by the nature of the taxpayer involved.
We work with existing advisors to construct the most effective justification and explanation of the taxpayer’s point of view. The success of our efforts is directly related to careful study and development of the correct strategy.