CRA Outlines Procedures for Exchange of Tax Rulings... | KPMG | CA

CRA Outlines Procedures for Exchange of Tax Rulings for BEPS

CRA Outlines Procedures for Exchange of Tax Rulings...

Global Tax Adviser, April 19, 2016. In a recent technical interpretation, the CRA outlines the types of rulings that may potentially be shared with other countries under Canada's new commitment to exchange information on certain tax rulings (TI 2016-0632941I7). The CRA also discusses the process that it will follow when providing these rulings to other countries and the information it will require from a taxpayer requesting a ruling that falls within the scope of the exchange initiative. The TI also confirms that pre-ruling consultations will be made a permanent part of the advance income tax ruling service.

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Summary of the CRA's Updates

Consistent with the OECD's recommendation to improve transparency, the CRA states in the TI that it may exchange a summary of a ruling with the countries of residence of the taxpayer's immediate parent company, ultimate parent company and certain other parties, if the ruling falls into one of the following categories:

  • Cross-border rulings related to preferential tax regimes (including international shipping and certain foreign life insurance operations of a Canadian company)
  • Cross-border rulings related to transfer pricing legislation
  • Cross-border rulings providing a unilateral downward adjustment to the taxpayer's taxable profits not directly reflected in the taxpayer's accounts
  • Rulings on permanent establishments (e.g., the existence or absence of a permanent establishment or the attribution of profits to a permanent establishment), and
  • Rulings on related party conduits (e.g. cross-border flows of funds or income through a related party conduit).

After receiving a summary of the ruling, a foreign country may ask to receive relevant portions of the ruling in more detail. According to the CRA, these exchanges of information will be performed by the CRA's Competent Authority Services Division according to the relevant tax treaties and other international agreements. With this protocol in effect, a taxpayer making a new ruling request must include sufficient information to allow the CRA to identify the taxpayer's immediate parent company, ultimate parent company and other parties relevant to the ruling.

In this TI, the CRA also confirms that its pilot project of providing pre-ruling consultations was successful and pre-ruling consultations will be made a permanent part of its advance income tax rulings service.

For more information, contact your KPMG adviser.

Disclaimer

Information is current to April 19, 2016. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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