What Changed at the CRA: A 2026 Compliance Checklist for International Businesses

The last eighteen months have been unusually busy for Canadian tax administration, and most of the movement has landed squarely on foreign-owned businesses. Transfer pricing has been rewritten. CRA correspondence has gone digital by default. Audit powers are being expanded. None of these changes were announced in a way that reliably reaches a finance team sitting in Singapore, Frankfurt, or São Paulo.

Here is what has actually changed, what is coming, and what to verify on your own file before the next filing cycle.

1. CRA Mail Is Now Digital, and You Are Deemed to Have Received It

This is the change that quietly causes the most damage, and it is administrative rather than legislative.

Since May 12, 2025 for new registrations and June 16, 2025 for existing ones, the CRA delivers most business correspondence through My Business Account rather than by post. Notices of assessment, review letters, audit queries, and payroll compliance notices now appear in an online portal.

The consequence is legal, not just logistical. A notice is considered received on the date it is posted to My Business Account, whether or not anyone opened it. Objection and appeal deadlines run from that date.

For an international business, the failure mode is obvious: no one on the Canadian file has portal access, no email notification address was ever set, the head office finance team has never logged in, and a review letter with a 30-day response window expires unread.

What to check:

• Is your business registered for My Business Account, with a current email address for notifications?
• Do your Canadian accountant and your head office controller both have valid authorization?
• If you need paper, has Form RC681 been filed by someone with signing authority? It must be submitted at least 30 days ahead, it covers only the accounts named on it, and it expires after two years.

Non-resident businesses with no Canadian resident owner or director and no authorized representative were left on paper by default. That is not a status you should rely on without confirming it account by account.

2. Transfer Pricing Has Been Rewritten, and the Clock Is Much Shorter

Bill C-15 received royal assent on March 26, 2026, and it is the most significant change to Canadian transfer pricing in more than two decades. It applies to taxation years beginning after November 4, 2025.

Three things matter operationally:

The test changed. Canada now applies an OECD-aligned two-step analysis: identify the actual conditions of the transaction, including contractual terms, functional profile, risk control, and business strategy, then compare those to what arm's length parties would have agreed. Substance over legal form is now written into the statute, and CRA adjustment powers were broadened rather than narrowed.

The deadline changed. Transfer pricing documentation must be provided within 30 days of a written CRA request, down from three months. Ninety days was enough time to assemble a study after the fact. Thirty days is not. Documentation now has to exist before the request arrives.

The penalty threshold changed. The transfer pricing penalty now applies where adjustments exceed the lesser of $10 million or 10% of gross revenue, up from $5 million.

If your Canadian entity pays management fees, royalties, cost-plus service charges, or intercompany interest to the parent, this is the single most important item on the list.

3. A Simplified Documentation Regime for Smaller Intercompany Flows

Finance released draft regulations on July 23, 2026 creating a simplified documentation regime under subsection 247(4.1), for taxation years beginning after December 31, 2025. It is aimed exactly at the mid-market subsidiary.

You may qualify where:

• Aggregated Canadian group revenue is $25 million or less (excluding intangible transfers and royalties), or
• Sales or purchases of tangible property are $5 million or less per year, or
• Intra-group services, including management fees and back-office support, cost $2 million or less per year, or
• Gross interest on intercompany loans is $1 million or less per year.

The election is made by the documentation due date, and the material still has to be produced within 30 days of a CRA request. Note the limits: the regime reduces the surrounding content, not the arm's length analysis itself; it carries a broad anti-avoidance rule; and it does not shield you from penalties.

4. Regulation 105 Relief Now Runs to March 31, 2027

The baseline rule has not moved: a Canadian payer must withhold 15% on fees paid to a non-resident for services rendered in Canada, and remit it, whether or not the non-resident ultimately owes Canadian tax.

What has moved is the administrative relief for reimbursements paid to non-residents in subcontracting arrangements. The CRA has extended it again, and taxpayers are not required to remit withholding, interest, or penalties on those amounts until March 31, 2027.

Two cautions. First, this is relief on a specific fact pattern, not a general exemption from Regulation 105. Second, it ends on a known date, so contracts and payment processes signed now should already contemplate withholding after that date. Bill C-15 also gave the CRA statutory authority to waive Regulation 105 withholding for eligible non-residents, which is a genuine improvement but still requires an application.

5. Expanded Audit Powers Are Close

Proposed legislation would give the CRA a Notice of Non-Compliance, issued administratively without going to Federal Court, carrying a penalty of $50 per day to a maximum of $25,000, and, while it is outstanding, suspending the normal reassessment limitation period. A companion power would let the CRA compel oral answers under oath during an audit.

These measures are not yet law, but they have been moving forward for two budget cycles. The practical preparation is the same regardless of timing: know where your records are, keep intercompany agreements signed and current, and be able to respond to an information request in days rather than months. Foreign-based information requirements are already the hardest category to satisfy on time because the documents usually sit outside Canada.

6. Filing Mechanics That Are Already Penalized

• Information returns: more than 5 slips of a given type must be filed electronically. Paper filing above that threshold costs from $125 to $2,500 per slip type, calculated separately for each type.
• XML validation tightened on October 20, 2025. Empty optional fields now cause rejection, and Web Forms submissions from 2025 or earlier should not be reused.
• GST/HST filing is electronic for essentially all registrants.
• Deadlines that catch cross-border groups: T4 and T5 by the end of February, NR4 by March 31, T106 and T1135 six months after year end, T1134 ten months after year end, EIFEL reporting on Schedule 130, RC3133 for uncertain tax treatments where assets reach $50 million, country-by-country reporting, and global minimum tax filings for groups above the EUR 750 million threshold.

7. Rates and Border Security

Federal general corporate tax remains 15%, with Ontario at 11.5% general. Ontario's small business rate drops from 3.2% to 2.2% effective July 1, 2026, and Newfoundland and Labrador's fell from 2.5% to 2% retroactive to January 1, 2026, with further reductions scheduled.

At the border, importers under CARM should note that Release Prior to Payment security is calculated as 50% of the highest month of duties and taxes over the previous 12 months, with a minimum of $5,000 and a maximum of $10,000,000 per RM account. CBSA reassesses annually on October 20, and importers whose requirement increased must post the additional security by January 15 or lose release privileges.

What to Do Before Your Next Filing Cycle

1. Confirm portal access, notification email, and representative authorizations on every CRA program account.
2. Inventory every intercompany flow and test it against the simplified regime thresholds.
3. Refresh transfer pricing documentation on the assumption that you have 30 days, not 90.
4. Map Regulation 105 exposure on all non-resident service contracts running past March 2027.
5. Rebuild your filing calendar around the cross-border returns, not just the T2.

Where DCP Fits

DCP Accounting & Consulting Services manages Canadian compliance for foreign-owned entities and for international groups establishing here, covering registrations, bookkeeping, payroll, GST/HST, corporate filings, and the cross-border information returns under one monthly engagement, with CRA correspondence monitored on your behalf rather than sitting unread in a portal. If you are unsure which of these changes already applies to your file, contact us for a compliance review.

---

Prepare Your Canadian Business for the Next Filing Cycle

Get a focused review of your CRA accounts, cross-border reporting obligations, and 2026 compliance calendar.

Book a Free Consultation | Contact Us