Five Tax Developments to Watch This Fall

The Canadian tax landscape was anything but quiet this summer, with several administrative, legislative and judicial developments carrying important implications for taxpayers.

Here are five updates worth keeping on your radar as we head into the fall.

1. CRA Audit Powers Are Expanding. Proposed amendments giving the Canada Revenue Agency (CRA) broader information-gathering and enforcement powers are now at second reading in Parliament. Privilege, document preservation and audit management will become increasingly important once these amendments are enacted. Taxpayers should consider whether existing internal protocols will be adequate under the expanded regime and adapt accordingly.
2. AI Enters the Audit Room. The CRA continues to expand its use of artificial intelligence (AI) and advanced analytics in tax administration and compliance. Its 2026–27 Departmental Plan expressly identifies the use of AI and other advanced tools as part of its modernization efforts. For taxpayers, this means scrutiny will be increasingly data-driven. Consistency across tax filings, financial statements, transfer pricing documentation and other information provided to the CRA is essential.
3. Transfer Pricing 2.0. Canada’s new transfer pricing regime is now in effect. The new regime includes rules governing how transactions are delineated, documented and tested. On July 23, the Department of Finance included a simplified transfer pricing documentation regime in its consultation on draft legislation for various tax measures. For multinational groups, transfer pricing compliance might look different from last year, and intercompany arrangements, functional analyses and documentation should be reviewed now.
4. Tariffs Meet Tax. The Canada–U.S. trade relationship continued to deteriorate over the summer, with significant new tariffs and retaliatory measures. For businesses, the tax consequences may extend well beyond customs duties. Changes to supply chains and operating models can create transfer pricing, customs valuation, indirect tax, permanent establishment and corporate-residence issues.
5. Key Court Decisions Remain in Place. The Supreme Court of Canada has declined to hear two tax cases of interest. It recently dismissed the application for leave in Husky Energy, which addressed the meaning of beneficial ownership for treaty purposes in the context of a securities lending arrangement, and in Vefghi, which dealt with the timing of the connectedness test for Part IV tax on dividends paid to a trust. The Court has yet to decide whether it will grant leave in DAC Investment, which could provide further guidance on the application of the GAAR.

Have more than five minutes? For more information, please contact the authors or any other member of our Tax group.