{"id":6649,"date":"2023-07-05T08:01:56","date_gmt":"2023-07-05T15:01:56","guid":{"rendered":"https:\/\/www.thor.ca\/?post_type=tax_alert&p=6649"},"modified":"2025-02-21T12:17:53","modified_gmt":"2025-02-21T20:17:53","slug":"new-expanded-mandatory-disclosure-rules-become-law","status":"publish","type":"post","link":"https:\/\/www.thor.ca\/blog\/2023\/07\/new-expanded-mandatory-disclosure-rules-become-law\/","title":{"rendered":"New \/ expanded mandatory disclosure rules become law"},"content":{"rendered":"

On June 22, 2023, Bill C-47 \u2013 An Act to implement certain provisions of the budgets tabled in Parliament on March 28, 2023<\/em> received Royal Assent. As a consequence, new or expanded mandatory reporting rules for certain \u201creportable\u201d or \u201cnotifiable\u201d transactions (as well as for \u201cuncertain tax treatments\u201d) are now law.<\/p>\n

Notifiable Transactions<\/u><\/p>\n

Under the new notifiable transaction regime, taxpayers, promoters and advisors are required to provide detailed reporting in respect of transactions, or series of transactions, they undertake that are designated as \u201cnotifiable\u201d or \u201csubstantially similar\u201d to a notifiable transaction. For this purpose, the term \u201csubstantially similar\u201d includes any transaction, or series of transactions, in respect of which a person is expected to obtain \u201cthe same or similar types of tax consequences\u201d and that is \u201ceither factually similar or based on the same or a similar tax strategy.\u201d The legislation expressly states that \u201csubstantially similar\u201d should be \u201cinterpreted broadly in favour of disclosure.\u201d<\/p>\n

The rules present serious and prolonged issues for taxpayers and their advisors, as described in our previous blog<\/a>.<\/p>\n

To date, no transactions or series of transactions have been officially designated as notifiable. However, we expect that designations will be made in the near future \u2013 potentially in line with the \u201csample\u201d notifiable transactions previously released by the Canada Revenue Agency.<\/p>\n

Reportable Transactions<\/u><\/p>\n

The amended reportable transaction rules require taxpayers, promoters and certain advisors to report subject transactions where one of the main purposes of the transaction or series is to obtain a tax benefit and any one<\/u> of the following hallmarks apply (subject to limited exceptions):<\/p>\n

Confidential protection <\/strong>\u2013 the promoter or advisor obtains anything that prohibits the disclosure of the details or structure of the transaction or series under which the tax benefit results<\/p>\n

Contractual protection<\/strong> \u2013 the taxpayer receives any form of insurance or other protection against the failure of the transaction or series from achieving any tax benefit, or reimburses the taxpayer for any expenses incurred in respect of disputing the tax benefit<\/p>\n

Contingency fee <\/strong>\u2013 the advisor or promoter is entitled to a fee that is based on the amount of the tax benefit that results from the transaction or series of transactions<\/p>\n

Time for Filing<\/u><\/p>\n

An information return must be filed on or before 90 days after the earliest of when the person becomes contractually obligated to enter into the transaction or when the person actually enters into the transaction.<\/p>\n

Penalties<\/u><\/p>\n

Non-compliance with the reporting obligations can result in significant penalties. In particular, the amount of the penalty can be:<\/p>\n