The Internet of Things (IoT) is the inter-networking of physical devices and places with the internet. A wide range of IoT applications has been introduced in recent years in areas where technology could easily fulfil several needs.

Products abound for smart homes (electronic meters, thermostats, lighting, refrigeration and locking devices, etc.), smart cities (waste management, parking management, etc.) and smart plants (automatic procedures). Experts believe, however, that the IoT is just getting started, considering the growing number of new applications on the market.

This article takes a light-hearted look at some of the most unusual IoT applications. As you can see, the possibilities are only limited by one’s imagination.

Distance gardening

The Telegarden was developed at the University of Southern California to view and interact with a remote garden filled with living plants. Members can plant, water, and monitor the progress of seedlings via the tender movements of an industrial robot arm.

Smart washrooms

Students at MIT wired a dorm’s washrooms and created a Website to see which stalls are available or in use and for how long.

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Automatic feeding technology

If you have a pet, you know you need someone to look after it when you’re away. What if family or friends aren’t available? You can now get a remote operated food dispenser with a webcam to manage your pet’s feeding schedule. You’ll know kitty is happy at home while you’re taking selfies in Paris.

Baby care

A New York company has created a wireless diaper, with a cellular sensor that lets Mom or Dad know when it’s time for a diaper change.

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Pill bottles

A smart pill bottle app has been developed that can be adapted to prescription medication bottle caps to let patients know if they’ve taken their meds at the prescribed times. The caps connect wirelessly to a base station, and the cap lights up if the patient hasn’t taken his or her pill within 30 minutes of the prescribed time. If the bottle isn’t open after an hour, an alarm rings. After two hours, a text or phone message is sent.

These are but some of the hundreds of IoT examples on the Internet. While some may seem frivolous, others could potentially improve many people’s quality of life. Will you have the next IoT brainstorm?

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Corporations that carry out significant transactions with foreign corporations under common control cannot avoid the question of transfer pricing because it encompasses tax compliance, risk management and international tax planning.

Canada Revenue Agency auditors currently consider this to be an important issue. They have realized in recent years that many taxpayers have been significantly underestimating reported income from cross-border intercompany transactions. It is, therefore, increasingly important to be aware of transfer pricing rules and correctly apply them.

Transfer pricing rules in Canada

Generally, in Canada, transfer pricing is governed by Section 247 of the Income Tax Act and Information Circular 87-2R published by the Canada Revenue Agency (CRA). The underlying rule in Canada is the arm’s length principle, which Canadian residents must apply for transactions with non-arm’s length non-resident parties. This principle requires that arrangements between the non-arm’s length parties be the same as those with arm’s length parties in similar circumstances. Essentially, under this principle, Canadian residents involved in such transactions should report the same income as they would have with non-resident parties that are at arm’s length.

If the arm’s length principles is not applied, the CRA can adjust the transfer prices and impose a penalty. The penalty could apply if total CRA upward adjustments (capital and income) are greater than $5,000,000 or 10% of the entity’s gross income and will be 10% of the adjusted amount. However, the transfer pricing penalty does not apply if the taxpayer demonstrates that it has made reasonable efforts to determine and use arm’s length prices.

Reasonable efforts by the taxpayer can be demonstrated if the taxpayer has prepared or obtained records or documents which provide a description that is complete and accurate of intercompany transactions and provide this documentation within three months of receipt of a CRA request. This documentation must be prepared within six months of each fiscal year end.

The penalty could apply if total CRA upward adjustments (capital and income) are greater than $5,000,000 or 10% of the entity’s gross income and will be 10% of the adjusted amount.


As part of the tax audit process, the first thing the CRA auditor will request is transfer pricing documentation. If the documentation has not been prepared in the six months following year-end, the taxpayer has no protection against transfer pricing penalties. Additionally, the auditor can determine what the transfer prices should have been and reassess the taxpayer’s income accordingly. However, if the documentation has been prepared within the required deadlines, while it may not be a guarantee, the taxpayer should be protected against transfer pricing penalties. Additionally, before reassessing income, the auditor must prove that the method applied in the documentation is not appropriate.

A taxpayer who receives a notice of reassessment has 90 days to file a notice of objection to protect its right of appeal with the CRA’s Appeals Branch and the Canadian Courts. Should a portion of the reassessment remain after the appeal, the taxpayer will be in double tax situation since tax will have been paid in the foreign country. The taxpayer must therefore contact both the Canadian and foreign authorities to ensure that, regardless of the result of the reassessment, there is no double taxation. It’s important to note that the CRA is one of the most aggressive tax authorities in the world when it comes to auditing transfer pricing. Unlike its U.S. counterpart, the CRA audits medium and large corporations and is prepared to issue a notice of reassessment for amounts as little a few hundred thousand dollars.

Unlike its U.S. counterpart, the CRA audits medium and large corporations and is prepared to issue a notice of reassessment for amounts as little a few hundred thousand dollars.

These audits have resulted in taxpayers spending considerable time and money objecting to the notices of reassessment, requesting the assistance of the appropriate Canadian and foreign authorities to avoid double taxation and appealing decisions in Canadian courts. In many cases, this could have been avoided had the transfer prices been properly determined and documented. Having well-prepared documentation with all the necessary supporting documents often determines the parameters considered during an audit.

International tax planning

Transfer pricing can also be a means for a multinational to manage its international tax burden. For example, it is to a multinational’s benefit to have added-value functions, high-value assets and high-risk activities located in jurisdictions with a lower tax rate since, under the transfer pricing principle applicable to these activities, the higher income levels are taxed.


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Corporations subject to applying transfer pricing rules are legally obligated to document their intercompany transactions. Missing documentation translates into a significantly higher risk of a reassessment, non-deductible penalties and interest payable in unpaid taxes. However, transfer pricing rules also provide all of the requisite tools to efficiently manage a multinational’s international tax burden. Transfer pricing rules should be known and applied.

Your Raymond Chabot Grant Thornton advisor can help answer your transfer pricing questions.

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Proposed Measures to End Certain Tax Planning Strategies Using Private Corporations

In its 2017 budget, the federal government signaled its intention to address tax planning strategies involving private corporations that can result in high-income individuals obtaining tax benefits not available to other individuals. Accordingly, on July 18 the Minister of Finance of Canada tabled certain legislative proposals and a Consultation Document: Tax Planning Using Private Corporations.

The legislative proposals tabled by the Minister basically address income splitting and tax planning designed to convert income from a corporation (dividends, salary) into capital gains. The government also announced plans to change the rules with respect to corporations that hold passive investments. Consultations are then also being held on this subject. Here is a brief overview of the various proposed measures.

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Welcome to IFRS Newsletter – a newsletter that offers a summary of certain developments in International Financial Reporting Standards (IFRS) along with insights into topical issues.

We begin this second edition of the year by considering how tax issues resulting from the UK’s decision to leave the European Union may affect entities’ financial reporting. We then move on to look at a number of proposals that have been published by the IASB, including the latest instalment in the IASB’s Disclosure Initiative project – a Discussion Paper which suggests principles to make disclosures in financial statements more effective.

Further on in the newsletter, you will find IFRS-related news at Grant Thornton and a general round-up of financial reporting developments. We finish with a summary of the implementation dates of newer standards that are not yet mandatory, and a list of IASB publications that are out for comment.