Tax services

Proposed mandatory disclosure rules

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As announced in the 2021 federal budget plan (Budget 2021), the government proposes to expand the mandatory disclosure rules contained in the Income Tax Act (the Act) to require taxpayers, advisors and promoters (and certain other parties) to disclose relevant information on aggressive tax planning or transactions to the Canada Revenue Agency (the CRA).

Updated: August 9, 2022

On February 4, 2022, the Department of Finance (Finance) released draft legislation for public comment, which include the following changes to the mandatory disclosure rules:

  1. An expansion of the Act’s reportable transaction rules, along with a significantly reduced reporting deadline;
  2. A new requirement to report notifiable transactions;
  3. A new requirement for certain corporations to report uncertain tax treatments;
  4. An extension of the normal reassessment period in non-compliance situations; and
  5. New related penalties (some of which accrue daily or weekly)

Overall, if the proposals are enacted in their current form, the compliance burden for taxpayers, advisors and promoters is anticipated to be significantly increased.

On August 9, 2022, Finance updated the draft legislation in response to feedback received during the consultation period. One major change is that the application date of the mandatory disclosure rules has been pushed back to 2023 from 2022. Interested parties can submit their comments on the proposed amendments by September 30, 2022.

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