The portion of a management or administration fee paid to a non-resident affiliate that is in excess of a reasonable amount may be treated as a deemed dividend.
RC is prepared to accept an allocation of the costs, direct and indirect, reasonably attributable to providing the relevant services to the Canadian taxpayer. Mark-ups or profit elements are appropriate only in certain circumstances.
Where the treaty does not contain a specific article on management or administration fees, such fees paid to the non-resident will, to the extent they are reasonable, be considered to be covered by the business profits article.