Various ForCo employees are key to large construction “Projects” of its Canadian sister. They will be “seconded” to the ForCo, so that they will be treated as CanCo employees, notwithstanding that they will stay on the ForCo payroll. CRA ruled that there will be no Reg. 105 withholding on the payroll reimbursement payments made by CanCo to ForCo, which will be made without any mark-up. ForCo representeed that:
Transfer prices for transactions between CanCo and ForCo will be determined in accordance with the arm’s length principle reflecting the functions and risks of both parties and will be supported by proper documentation.