CRA considers that no statute-barring applies to initial assessments of transfer-pricing penalties

In the situation where Canco acquires a non-depreciable capital property in Year 1 from an affiliate at a price that is substantially in excess of an arm’s length price, and then disposes of the property at a gain in Year 8 to a third party, CRA considers that a transfer pricing capital adjustment can be made to grind the adjusted cost base of the property in Year 1 even though that year is now statute-barred re Part I reassessments – and that, as “an initial assessment under subsection 247(3) can be made at any time,” a s. 247(3) penalty could be imposed re this Year 1 TPCA in the absence of reasonable efforts etc.

Neal Armstrong. Summaries of 14 September 2016 Internal T.I. 2016-0631631I7 under s. 247(3), s. 247(11) and s. 247(2).