Preparing contemporaneous documentation

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Obtain penalty protection from tax authorities

Contemporaneous documentation may provide penalty protection from the Canada Revenue Agency (CRA) when the tax authority proposes a transfer pricing adjustment.

Multinational organizations that do not provide contemporaneous documentation—within three months of a request from the CRA—may be subject to a non-deductible penalty of 10 percent of the reassessed amount, so it pays to be ready.

How PricewaterhouseCoopers can help

Our PwC Transfer Pricing practice can work with you to prepare the appropriate contemporaneous documentation so that significant adjustments are less likely to arise during an audit. Our approach comprises three main components:

  • Functional analysis: Describing the business and relevant transactions undertaken by the business
  • Financial analysis: Determining the profitability on inter-company transactions
  • Economic analysis: Using a suitable transfer pricing methodology

PwC’s process helps you substantiate that you have made reasonable efforts to set arm’s length prices for the transactions with your company’s related parties and helps to prevent the CRA from levying a penalty if they decide that an adjustment to the transfer price is required.

Contact a member of our Transfer Pricing practice to determine if your contemporaneous documentation is up to date.