The Tax Court of Canada has published its judgment in Marzen Artistic Aluminum Ltd. v The Queen (2014 TCC 194) on 10 June 2014 regarding a case of transfer pricing adjustment made by the Canada Revenue Agency (CRA) in respect of fees paid by Marzen to Starline International Inc. (SII), a Barbados-based corporation wholly owned by the taxpayer. The CRA reassessed to disapprove $2,110,502 of the SII fees in 2000, and $5,025,190 in 2001, effectively not approving a reduction of any amount for SII performed services.
After discussion of the proof presented by both parties and the testimony of some witness, Tax Court of Canada held that, according to the motive of s. 247 of the Income Tax Act, an arm’s-length’s party would have paid only US$32,500 per year under appeal for the services provided by SII. On the basis of the assessment of transfer pricing penalty, Justice got that the information and documentation the taxpayer supplied to the CRA was inefficient to resist penalty application assessed by the Minister for the taxpayer’s 2000 and 2001 taxation years.
