Canada's Bill C-15 represents a generational shift in how the country approaches transfer pricing compliance. Taking effect for taxation years beginning after November 4, 2025, the legislation embeds OECD transfer pricing principles directly into Canadian law, aligns documentation obligations with international standards, and dramatically tightens the Canada Revenue Agency's (CRA's) access to taxpayer information.
The 30-Day Documentation Rule
Perhaps the most operationally significant change is the compression of the CRA's documentation response window. Previously, MNEs had considerably more time to compile and submit transfer pricing documentation upon request. Under Bill C-15, this window is shortened to 30 days, a standard that will require companies to maintain truly contemporaneous documentation rather than preparing records in response to audit triggers.
Companies with historically reactive TP documentation practices face immediate risk under the new 30-day standard. Those without a maintained, contemporaneous Master File and Local File should begin remediation immediately for fiscal years beginning after November 4, 2025.
Expanded Documentation & Penalty Thresholds
Bill C-15 expands the scope of documentation obligations and increases penalty thresholds for non-compliance, creating stronger incentives for proactive TP governance. The legislation also tightens delineation analysis requirements the process of accurately characterising transactions between related parties bringing Canadian practice into closer alignment with OECD Chapter I standards. In parallel, the Global Minimum Tax Act continues to advance Canada's Pillar Two implementation, with further guidance and legislative refinement expected throughout 2026.
Interaction with Pillar Two
Canada's Pillar Two implementation creates an important interaction dynamic: TP policies must not artificially depress effective tax rates, as tax authorities are expected to scrutinise intercompany pricing specifically for its effect on Qualified Domestic Minimum Top-Up Tax (QDMTT) calculations. Robust TP documentation will be essential not only for traditional audit defence but for demonstrating appropriate ETR outcomes under GloBE.
