6 Transfer Pricing Audit Defence tax and accounting engagements in full — what the client came to us with, what we did, and what it was worth. Each one is specific to transfer pricing audit defence work, not a general example.
Case Study 1 · Missed incentive claimed
$78,000 In Credits Claimed That Prior Filings Had Missed — Canadian with a US, Mississauga
Client: A Canadian with a US employer · Where: Mississauga, Ontario · Engagement: 11 weeks, fixed fee
Credits claimed$78,000
Years adjusted5
Review outcomeNo adjustment
The situation
A Canadian with a US employer in Mississauga, Ontario had been filing for 5 years without ever claiming the incentives its activity qualified for. Behind that sat 25% withholding on gross Canadian rent where a section 216 election would have taxed only the net.
What we did
We tested each activity against the eligibility criteria rather than the description on the invoice, then restructured the US holding so the Canadian and US characterisations aligned, ending the double taxation going forward.
The result
$78,000 in credits claimed, with the open prior years adjusted as well. The claim passed review without adjustment.
Case Study 2 · Sale and succession
Share Sale Restructured, $790,000 Less Tax On Closing — US Citizen Living in, Brampton
Client: A US citizen living in Canada · Where: Brampton, Ontario · Engagement: 6 weeks, fixed fee
Tax saved on closing$790,000
PriceAs agreed
Post-closing adjustmentsNone
The situation
A US citizen living in Canada in Brampton, Ontario was preparing to sell. Due diligence surfaced no valuation on file to support the price the parties had agreed, which would have reduced the price or killed the deal outright.
What we did
We cleaned up the historical file, filed the section 216 election with the supporting rental statements and recovered the excess withholding as a refund, and prepared the due-diligence package the buyer's advisers actually asked for.
The result
The deal closed at the agreed price. $790,000 of tax was saved against the structure originally proposed, with no post-closing adjustment.
Case Study 3 · Deadline rescue
Filed On Time From A Standing Start, $34,500 Penalty Avoided — Dual Citizen with a, Lethbridge
Client: A dual citizen with a US retirement account · Where: Lethbridge, Alberta · Engagement: 4 weeks, fixed fee
Penalty avoided$34,500
Turnaround4 weeks
FiledOn time
The situation
A dual citizen with a US retirement account in Lethbridge, Alberta came to us 4 weeks before its filing deadline with 25% withholding on gross Canadian rent where a section 216 election would have taxed only the net. A late filing would have triggered a penalty of roughly $34,500 before interest.
What we did
We worked backwards from the deadline. We reported the deemed disposition properly on the departure return and claimed the foreign tax credits that had been left unused, prioritising the items that actually gated the filing and deferring everything that did not.
The result
The return was filed on time and complete. The $34,500 penalty never arose, and the compliance calendar we set means the next deadline is scheduled rather than discovered.
Case Study 4 · Scaling without breaking
Second-Province Expansion Handled, $113,000 Of Cash Released — Shareholder of a US, Halifax
Client: A shareholder of a US LLC · Where: Halifax, Nova Scotia · Engagement: 11 weeks, fixed fee
Cash released$113,000
New registrationsComplete on day one
Compliance gapsNone
The situation
Revenue at a shareholder of a US LLC in Halifax, Nova Scotia was up sharply and cash was tighter than ever. Underneath it sat US tax paid but no foreign tax credit claimed on the Canadian return.
What we did
We filed the outstanding T1135 disclosures through the Voluntary Disclosures Program, which eliminated the penalty exposure entirely. Every new obligation — registration, remittance frequency, provincial filing — was set up before it was triggered, not after.
The result
$113,000 of cash was released from the working capital cycle, and the expansion completed with every registration and filing obligation covered from day one.
Case Study 5 · CRA review defended
$79,000 Proposed Adjustment Withdrawn In Full — Snowbird Spending Winters in, Moncton
Client: A snowbird spending winters in Arizona · Where: Moncton, New Brunswick · Engagement: 10 weeks, fixed fee
Adjustment withdrawn$79,000
File closed in10 weeks
Penalties assessedNone
The situation
A snowbird spending winters in Arizona in Moncton, New Brunswick received a proposal letter opening a review of transfer pricing audit defence. The CRA had identified a US LLC taxed as a corporation in Canada, producing double tax on the same income and proposed an adjustment of $79,000, with 30 days to respond.
What we did
We treated the response as an evidence exercise rather than an argument. We restructured the US holding so the Canadian and US characterisations aligned, ending the double taxation going forward, then indexed every supporting document against the specific line the auditor had questioned.
The result
The proposed adjustment was withdrawn in full — all $79,000 of it. The file closed in 10 weeks with no change to the assessed amounts and no penalty.
Case Study 6 · Structure rebuilt
Reorganisation Completed Tax-Deferred, $25,500 Saved Each Year — Inbound Transferee on Assignment, Ottawa
Client: An inbound transferee on assignment · Where: Ottawa, Ontario · Engagement: 5 weeks, fixed fee
Annual saving$25,500
Tax on reorganisationDeferred
Elections filedOn time
The situation
An inbound transferee on assignment in Ottawa, Ontario had outgrown the structure it started with. A departure year filed as a normal resident return with no deemed disposition reported was the immediate problem; the longer-term one was that the structure blocked the next step.
What we did
We mapped the current structure, modelled the target, and filed the section 216 election with the supporting rental statements and recovered the excess withholding as a refund — with the tax-deferred elections filed on time and the supporting valuations documented.
The result
The reorganisation completed without triggering tax, and the new structure saves approximately $25,500 a year while removing the exposure the old one carried.
Reviewed for the 2025 tax year by Udit Gupta, Certified Tax Accountant. Figures describe representative engagements of this type; outcomes depend on your own facts. Client names and identifying details are omitted for confidentiality.
