CRA appears to consider that generally a Canadian enterprise may not pass along the benefit of government assistance to a non-resident affiliate in its transfer pricing

CRA considers that:

When a cost-based transfer pricing methodology is used to determine the transfer price of goods, services, or intangibles sold by a Canadian taxpayer to a non-arm's length non-resident person and the Canadian taxpayer receives government assistance, the cost base should not be reduced by the amount of the government assistance received, unless there is reliable evidence that arm's length parties would have done so given the specific facts and circumstances.

CRA provides an example of a Canadian enterprise providing R&D services to an affiliate at a price equal to cost (as reduced by SR&ED tax credits) plus 10%, so that CRA in the absence of such “reliable evidence” would increase the transfer price to 110% of the gross cost.

It may be difficult or impossible for the Canadian enterprise to find evidence of arm’s length parties passing on the cost reduction from government assistance.

Neal Armstrong. Summary of TPM-17 “The Impact of Government Assistance on Transfer Pricing” under s. 247(2).