CRA will not apply s. 247(2) to a CFA earning FAPI if the transaction has been vetted under foreign OECD-based transfer pricing rules

CRA considers that the s. 247(2) rules apply to transfer pricing between a controlled foreign affiliate and non-resident non-arm’s length persons where such transactions affect the computation of the CFA’s foreign accrual property income. However, CRA generally will not apply s. 247 to such a transaction where

• the pricing is reviewed by the tax authority of the country in which the foreign affiliate is resident;
• the pricing is determined to be in accordance with the transfer pricing legislation or guidelines of that country; and
• that legislation (and guidelines) adopt the arm’s-length principle.

Neal Armstrong. Summary of 26 April 2017 IFA Roundtable, Q.2 under s. 247(2).