What transfer pricing documentation does the CRA require?

What “contemporaneous” actually demands

Section 247's penalty protection depends on records made or obtained by the filing-due date for the year, describing: the property or services transacted and the participants; the terms and their relationships; the functions performed, assets used and risks assumed by each party; the transfer pricing method selected and the rejection of alternatives; and the comparable transactions or benchmarks relied on.

When the CRA issues a written request, you have three months to produce the package. Documentation assembled after the request does not count as contemporaneous — the penalty shield is gone before the audit begins.

The penalty math

Where adjustments exceed the lesser of $5 million and 10% of gross revenue, a 10% penalty applies to the adjustment — unless reasonable efforts to determine arm's-length prices are documented. The penalty is about the paperwork, not the price: a defensible price with no documentation is still exposed.

Larger groups add the BEPS layer: a master file and local file aligned to OECD Action 13, and country-by-country reporting once consolidated group revenue passes €750 million.

Right-sizing the exercise

A two-entity group recharging management services does not need a hundred-page study — it needs the intercompany agreement, a clean functional analysis, a method note and a benchmark that fits. We scale documentation to transaction risk: routine low-value services on the simplified approach, distribution margins benchmarked properly, and anything touching IP or financing treated as the audit magnet it is.