CRA’s new reporting requirements

Earlier this year, the government passed legislation requiring disclosure of reportable transactions to CRA. The legislation addresses concerns about how aggressive tax avoidance transactions affect the fairness of the income tax system – everyone must pay the correct amount of taxes.

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What is a reportable transaction?

Any transaction undertaken alone or as part of a series of transactions to avoid paying taxes.

To whom do the new reporting requirements apply?

Under the new legislation, a person (including an individual, corporation, trust, or partnership) must disclose a reportable transaction by filing an information return with the CRA. This reporting requirement also applies to any person who enters into such a transaction for the benefit of another person.

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If one or more promoters or advisors are entitled to fees as described in the hallmarks for a particular transaction, each of these promoters or advisors must also file an information return with the CRA.

What is the process?

Form RC312, Reportable Transaction Information Return, must be filed on or before June 30 of the calendar year following the calendar year in which the transaction first became a reportable transaction. It must be filed separately from any information return, including an income tax return.

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What are the consequences of not reporting a reportable transaction?

If a Form RC312 for a reportable transaction is not filed when required, each person who has to file this form will be liable to pay a penalty, notwithstanding any agreement between the parties as to who is going to file the return. The amount of the penalty is equal to the total of all the fees for the transaction that the promoter or advisor is entitled to receive (these fees are described in the first and third hallmarks under “What is a reportable transaction” on the previous page). A promoter or advisor is liable to pay a penalty only to the extent of the fees to which he or she is entitled.

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