In a transfer-pricing context, the arm’s length transfer price trumps FMV

CRA noted that where, on a non-arm’s length transfer of capital property by a non-resident in favour of a resident Canadian, the fair market value of the property differs from the arm’s length transfer price, resort should be had to the latter. CRA did not give any examples of when the two values would differ – although it did note that FMV "generally represents the highest price obtainable for a property on a sale in a free and open market between two willing, informed and prudent persons acting independently" (emphasis added).

Neal Armstrong. Summary of 10 October 2014 APFF Roundtable, Q. 26, 2014-0538201C6 F under s. 247(2).