| PROFESSIONAL ACCOUNTANT June 2008 | Issue 1 |
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In This Issue
Barbados International Business Corporations
Valuing A Small Business
"Thinly Traded"
Transfer Pricing Penalties
The Canada Revenue Agency View on Consignment
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Barbados International Business Corporations
The Canadian manufacturing industry has faced significant pressures relating to a strong Canadian dollar and a weakening U.S. economy.
The Bank of Canada is unlikely to improve the situation by weakening Canadian exchange rates sufficiently to make Canadian manufacturers
more competitive, especially over the long run. Canadian manufacturers should work to improve their level of competitiveness from an after
tax perspective, by locating some of its business activities in Barbados, thus taking advantage of reduced tax rates. While locating to
Barbados will require Canadian businesses to meet the requirements set out in the Treaty and Barbados legislation, doing so will improve
its level of competitiveness within the global economy.
more...
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Valuing A Small Business
The Selling price of a Business is of consequence and of particular importance to the buyer. Valuation of many businesses made by owners,
brokers, and agents are not properly supported by facts.
more...
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"Thinly Traded"
Often tax authorities are required to make an estimation of the fair market value ("FMV") of a block of shares transferred between related parties.
It would seem that valuing publicly traded stock would be relatively easy given that their "market" prices are posted on various stock exchanges
at the end of each business day. However, this task does not become so easy when one must evaluate the FMV of a block of thinly traded shares.
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Transfer Pricing Penalties
CRA auditors are gaining greater experience and the taxpayer must ensure that its analysis is sufficiently strong that a CRA auditor cannot challenge it.
There are many issues in a transfer pricing study that should be dealt with effectively to avoid a transfer pricing audit. It is important to adequately
compensate a related party so that it earns the profits it deserves, and that such profit falls within industry norms.
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The Canada Revenue Agency View on Consignment
International auditors in Canada are increasing their audit and inspection activity of international transactions which may lead to significant tax exposure
for multinational companies operating in Canada. This inspection activity is targeting the transfer price charged between related parties within a
multinational entity on goods, services and/or intangibles crossing international borders.
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