Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: 1. What is the current CRA work situation in connection with the conduct of international audits and requests for foreign based information? 2. How has the CRA been managing both the Advance Pricing Arrangement (APA) and Mutual Agreement Procedure (MAP) requests in the current environment and what is the plan going forward? 3. Has the Transfer Pricing Review Committee (TPRC) been meeting regularly during the COVID-19 pandemic and what is the plan going forward? 4. As there have been significant domestic and international travel restrictions imposed because of the COVID-19 pandemic, how has the CRA been managing APA and MAP matters with treaty partners? 5. How is the CRA addressing issues surrounding impending treaty-based limitation periods? Have extensions been discussed with treaty partners?
Position: 1. The CRA has resumed a full range of audit work and continues to adapt its practices to reflect the health and economic impacts of COVID-19. On June 23rd, 2020 the CRA launched its National Business Resumption Plan to detail the stages of the resumption of various program and corporate activities and operations that had not resumed during the CRA’s critical services phase under the Business Continuity Plan. Priority continues to be given to actions that are beneficial to the taxpayer or where taxpayers have indicated there is an urgency to advancing their audit. In prioritizing the resumption, focus is placed on higher dollar audits first, audits close to completion, and those with a strategic importance to the Government of Canada, provinces and territories, or our tax treaty partners. 2. APA and MAP requests are continuing to be received and being worked on. Time limits for mandatory arbitration have not changed as communications and negotiations with foreign tax administrations continue to occur through the same virtual means. 3. Yes, the TPRC has been meeting regularly throughout the COVID-19 pandemic. There have been no delays in scheduling the monthly meetings nor in the decision making process. 4. The CRA developed a webpage on Canada.ca to provide guidance on international income tax issues raised by the COVID-19 crisis. The administrative approach taken by the CRA in addressing these issues is intended to assist taxpayers during this time of crisis. It does not represent any interpretive position or intention to establish any broader policy by the CRA. 5. There is no flexibility to extend treaty based limitation periods and, wherever possible, we have been meeting those deadlines and reassessing in time. For domestic situations, in the early days of the COVID-19 pandemic, we processed only high risk reassessments. Reassessments that were close to becoming statute barred were generally in that category, particularly for material issues.
2020 International Fiscal Association Conference
CRA Roundtable
Question 4: Update on COVID-19 Measures - Impact of COVID-19 on CRA Procedures
As CRA and taxpayer offices commence re-opening in a number of provinces, would the CRA be able to provide an update on the following matters?
a. What is the current CRA work situation in connection with the conduct of international audits and requests for foreign based information?
b. How has the CRA been managing both the Advance Pricing Arrangement (APA) and Mutual Agreement Procedure (MAP) requests in the current environment and what is the plan going forward?
c. Has the Transfer Pricing Review Committee (TPRC) been meeting regularly during the COVID-19 pandemic and what is the plan going forward?
d. As there have been significant domestic and international travel restrictions imposed because of the COVID-19 pandemic, how has the CRA been managing APA and MAP matters with treaty partners?
e. Where Article 9 of a Treaty provides for an express and specific calendar year limitation for assessing or reassessing tax on certain transfer pricing adjustments (Treaty Based Limitation Periods), how is the CRA addressing issues surrounding impending Treaty-Based Limitation Periods? Have extensions been discussed with treaty partners?
CRA Response:
a. The CRA has resumed a full range of audit work and continues to adapt its practices to reflect the health and economic impacts of COVID-19.
The International and Large Business programs were identified as critical services on the CRA’s Business Continuity Plan in early June, at which time we began bringing these programs online to resume somewhat regular compliance activities.
On September 17, 2020 the CRA launched its Update: National Business Resumption Plan – September 17, 2020 to detail the stages of the resumption of various program and corporate activities and operations that had not resumed during the CRA’s critical services phase under the Business Continuity Plan.
Priority continues to be given to actions that are beneficial to the taxpayer or where taxpayers have indicated there is an urgency to advancing their audit. In prioritizing the resumption, focus is placed on higher dollar audits first, audits close to completion, and those with a strategic importance to the Government of Canada, provinces and territories, or our tax treaty partners.
b. APA and MAP requests are continuing to be received and being worked on.
APA pre-file meetings are now occurring virtually through teleconference, with the possibility of videoconferencing in the future.
Time limits for mandatory arbitration have not changed as communications and negotiations with foreign tax administrations continue to occur through the same virtual means.
c. Yes, the TPRC has been meeting regularly throughout the COVID-19 pandemic. There have been no delays in scheduling the monthly meetings nor in the decision making process. The meetings have been held via secured government teleconference phone lines to ensure that all protected information is discussed in a secure environment. The plan is to continue with these virtual meetings until it is determined that TPRC members are able to physically return to the office.
d. The CRA developed a webpage on Canada.ca to provide guidance on international income tax issues raised by the COVID-19 crisis.
This webpage describes many potential issues, including Income Tax Residency; Carrying on business in Canada/permanent establishment; Cross-border employment income; Waiver Requests – Payments to non-residents for services provided in Canada; Disposition of taxable Canadian property by non-residents of Canada; and Non-Resident Employer Certification and outlines the CRA's approach to address each of them.
The administrative approach taken by the CRA in addressing these issues is intended to assist taxpayers during this time of crisis. It does not represent any interpretive position or intention to establish any broader policy by the CRA.
The CRA is continuing the communications with all treaty partners as necessary. Any sensitive correspondence and submissions to treaty partners are being sent/received through protected secure mailboxes. Regular discussions and negotiations at individual level and team level are taking place virtually through phone calls and teleconferences. The CRA has also introduced the possibility of videoconferencing communications through Cisco WebEx on a limited basis in an effort to move forward the cases. Additionally, functional interviews for APAs are also being conducted virtually along with treaty partners.
e. There is no flexibility to extend Treaty Based Limitation Periods and, wherever possible, we have been meeting those deadlines and reassessing in time.
For domestic situations, in the early days of the COVID-19 pandemic, we processed only high risk reassessments. Reassessments that were close to becoming statute barred were generally in that category, particularly for material issues.
Whenever there is no treaty statute barred concern, the domestic limitation periods to issue a reassessment set out in section 152 are still relevant taking into account any extension that may be applicable as a result of the Order made by the Minister of National Revenue on August 31, 2020 pursuant to subsections 7(1) and (5) of the Time Limits and Other Periods Act (COVID 19). Due to challenges arising from Covid-19, taxpayers are invited to provide waivers as needed.
Angelina Argento/Marie-Claude Routhier
2020-085339
September 15, 2020
Response prepared in collaboration with:
Alexandra MacLean, International Tax Division
International and Large Business Directorate
Compliance Programs Branch
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