Elk prevails in using a commission-based transfer pricing approach

CRA reassessed a Canadian company ("Elk"), which was charging cost-based commissions to its Japanese affiliate for its procurement of supplies of logs, by applying the transactional net margin method rather than increasing the commissions.  Joel A. Nitikman, who acted for Elk, infers that the subsequent consent judgment of the Minister "is, essentially, an admission that the TNMM, at least in the manner in which it is used in this case, cannot apply under the 'terms and conditions' rule in paragraphs 247(2)(a) and (c)... ."  (CRA also was unsuccessful with TNMM in Alberta Printed Circuits.)

Jules Lewy and Joel A. Nitikman, "Important Developments in Canadian Transfer Pricing", CCH Tax Topics, Number 2185, January 23, 2014, p. 1 under s. 247(2).