In the situation where Canco acquired a non-depreciable capital property in Year X from an affiliate at a price that was substantially in excess of an arm’s length price, and then disposed of the property at a gain in Year X + 7 to a third party, the Directorate considered that a transfer pricing capital adjustment could be made to boost the adjusted cost base of the property in Year X even though that year was now statute-barred re Part I reassessments – and that, as “an initial assessment under subsection 247(3) can be made at any time,” a s. 247(3) penalty could be imposed respecting this Year X TPCA in the absence of reasonable efforts etc. The Directorate went on to state:
However, pursuant to subsection 247(11), any additional assessment under subsection 247(3) for the year of the TPCA (Year X) would be subject to restriction based on an application of subsection 152(4) with respect to Year X and Part XVI.1. …