Tax News Update    Email this document    Print this document  

March 8, 2024

Canada Revenue Agency releases revised Information Circular on Advance Pricing Arrangements

Executive summary

On 22 February 2024, the Canada Revenue Agency (CRA) released Information Circular IC94-4R2, International Transfer Pricing: Advance Pricing Arrangements (APAs), which cancels and replaces Information Circular 94-4R, issued on 16 March 2001, and Information Circular 94-4RSR (Special Release), issued on 18 March 2005.

Among other items, the new Information Circular updates the CRA's guidance on the acceptance and processing of APAs, including guidance on the following topics:

  • Prefiling meetings
  • Processing APA requests
  • Information requirements
  • Legal effect of an APA
  • Administering an APA

This Tax Alert highlights some of the more substantive changes included in new IC94-4R2.


The revised Information Circular not only converts the prior guidance to an updated electronic format, but also includes some revisions related to procedures and policies, largely to update the guidance to reflect how the Canadian APA program has been operating over the past decade. More specifically, observations regarding IC94-4R2 include:

  • Prefiling meetings — The CRA will continue to rely heavily on the information provided in the "prefiling" stage of the APA submission, which is used to secure a prefiling meeting with Competent Authority Services Division (CASD) representatives. The new Information Circular includes a comprehensive list of typical prefiling package contents. The guidance reinforces existing well-established practices and highlights the CRA's ability to request additional information from taxpayers throughout the APA process.
  • Suitability of APA requests — While five benefits of the APA program are listed in paragraph 13 of IC94-4R2, the CRA also lists, in paragraph 42, 16 possible reasons why a taxpayer or the proposed covered transactions may not be suitable for an APA after a complete prefiling package is provided. In addition, in paragraph 15, the CRA lists five reasons why it may decide not to continue with an accepted APA. This comparison is consistent with observations by the broader tax community that the CRA appears to have become more restrictive in its acceptance of cases into the APA program in recent years.
  • Acceptance of certain transactions — A draft version of the Information Circular, which was provided for limited stakeholder feedback last summer, contained two examples that have been removed from the list (in paragraph 42 of IC94-4R2) of example reasons why the CRA may decide that a taxpayer is not suitable for the APA program. More specifically, the CRA has removed from the list of examples transactions that have yet to commence and transactions where the CASD disagrees with the existing or proposed transfer pricing method. The CRA did not indicate why these were removed; one explanation could be that the CRA is currently conducting APAs for transactions in both categories.
  • Renewing an APA — The new Information Circular indicates that APA renewals should be "generally more streamlined and less onerous than the initial process" but cautions taxpayers that the completion timelines are dependent on a number of factors. Nonetheless, renewing an APA may present challenges if contentious issues are identified, particularly if the original APA had similar issues, or if the key facts and circumstances of the APA have changed from the original request. In these cases, the timelines for renewals have generally not improved significantly.


The demand for APAs by Canadian taxpayers remains high, given that the alternative is often a complex transfer pricing audit with onerous collections elements, followed by further domestic recourse involving an appeal with the CRA or the courts, and potentially a request for relief of double taxation under a tax convention. The conclusion of an APA, while not quick or easy, provides tax certainty over a number of years generally in a shorter time than a single audit and recourse cycle, without the upfront adverse cash flow implications.

For further details, refer to the updated CRA guidance, which is available on the CRA website.

* * * * * * * * * *
Contact Information

For additional information concerning this Alert, please contact:

Ernst & Young LLP (Canada), Toronto

Ernst & Young LLP (Canada), Ottawa

Ernst & Young LLP (Canada), Quebec and Atlantic Canada

Ernst & Young LLP (Canada), British Columbia

Ernst & Young LLP (Canada), Prairies

EY Law (Canada)

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor