When CRA disallows part of the deduction by a corporation of the management fee charged to it by another (presumably affiliated) corporation ("Managementco"), it generally will accept a downward adjustment to the revenues of Managementco if Managementco reimburses the other corporation for the denied amount, Managementco’s relevant taxation year is not statute-barred and it sends a written request to CRA in which it "demonstrate that it has reimbursed, or committed to reimburse, a sum equivalent to that whose deductibility was denied." However, CRA will not do this "if there is abuse or a deliberate overstatement of the fees." CRA also stated:
Furthermore, a given corporation generally has no right to deduct an expense for a business of another taxpayer which is paid by it if it does not receive any compensation for such expense. In order to avoid a type of double taxation in such a case, the given corporation would invoice the other taxpayer for the disbursement and the other taxpayer would pay such amount to the given corporation. Thus, the other taxpayer could deduct the amount of the invoice if it was an expense incurred for its business provided it was reasonable and complied with the other provisions of the Income Tax Act in light of the relevant facts respecting the situation of the taxpayer in question.