CRA indicates that a Canadian sub can voluntarily adopt IFRS to increase its retained earnings for thin cap purposes if its parent needs IFRS (in addition to, say, US GAAP) financials
After noting “that a taxpayer may be been able to significantly increase the reported retained earnings by adopting IFRS,” CRA indicated that a Canadian subsidiary within a multinational group could compute its retained earnings using IFRS, even if its adoption of IFRS was voluntary rather than mandatory, subject to the general qualification that the accounting method followed is expected to be consistent with the method followed for preparing financial statements for presentation to its shareholders.
CRA further indicated that this requirement would not be violated for instance where there was a dual-listed parent that was required to prepare financial statements both under IFRS and US GAAP. It stated:
A multinational entity … may be required to prepare financial statements using different accounting methods in order to be compliant with the GAAP for each particular country in which financial statements are required to be prepared. As such, it is feasible that a Canadian taxpayer which is part of a multi-national group of companies, who prepares financial statements for income tax purposes under Canadian GAAP (IFRS or ASPE), will also prepare financial statements using another accounting method for purposes of consolidation by a parent entity located in another country, which has a different GAAP. Absent objectionable tax planning or abusive tax avoidance, this may be acceptable, but each particular situation would need to be considered on a case-by-case basis.
Neal Armstrong. Summary of 29 October 2018 Internal T.I. 2018-0746351I7 under s. 18(5) – equity amount – (a).