Budget Implementation Act, 2023, No. 1 (S.C. 2023, c. 26)

Marginal note:Definitions

• 237.4 (1) The following definitions apply in this section.

  advisor

  advisor, in respect of a notifiable transaction, means each person who provides, directly or indirectly in any manner whatever, any assistance or advice with respect to creating, developing, planning, organizing or implementing the notifiable transaction, to another person (including any person who enters into the notifiable transaction for the benefit of another person). (conseiller)

  fee

  fee, in respect of a notifiable transaction, has the same meaning as in subsection 237.3(1). (honoraires)

  notifiable transaction

  notifiable transaction, at any time, means

  • (a) a transaction that is the same as, or substantially similar to, a transaction that is designated at that time by the Minister under subsection (3); and

  • (b) a transaction in a series of transactions that is the same as, or substantially similar to, a series of transactions that is designated at that time by the Minister under subsection (3). (opération à signaler)

  person

  person includes a partnership. (personne)

  promoter

  promoter, in respect of a notifiable transaction, has the same meaning as in subsection 237.3(1). (promoteur)

  tax benefit

  tax benefit has the same meaning as in subsection 245(1). (avantage fiscal)

  tax treatment

  tax treatment has the same meaning as in subsection 237.3(1). (traitement fiscal)

  transaction

  transaction has the same meaning as in subsection 245(1). (opération)

• Marginal note:Interpretation – substantially similar

  (2) For the purposes of the definition notifiable transaction in subsection (1), the term “substantially similar”

  • (a) includes any transaction, or series of transactions, in respect of which a person is expected to obtain the same or similar types of tax consequences (as defined in subsection 245(1)) and that is either factually similar or based on the same or similar tax strategy; and

  • (b) is to be interpreted broadly in favour of disclosure.

• Marginal note:Designation of notifiable transactions

  (3) The Minister may designate for the purposes of this section, with the concurrence of the Minister of Finance, in such manner as the Minister considers appropriate, transactions or series of transactions.

• Marginal note:Requirement to file return

  (4) An information return in prescribed form and containing prescribed information in respect of a notifiable transaction must be filed with the Minister by

  • (a) every person for whom a tax benefit results, or for whom a tax benefit is expected to result based on the person’s tax treatment of the notifiable transaction, from

    • (i) the notifiable transaction,

    • (ii) any other notifiable transaction that is part of a series of transactions that includes the notifiable transaction, or

    • (iii) a series of transactions that includes the notifiable transaction;

  • (b) every person who has entered into, for the benefit of a person described in paragraph (a), the notifiable transaction;

  • (c) every advisor or promoter in respect of the notifiable transaction; and

  • (d) every person who is not dealing at arm’s length with an advisor or promoter described in paragraph (c) and who is or was entitled, either immediately or in the future and either absolutely or contingently, to a fee in respect of the notifiable transaction.

• Marginal note:Application

  (5) For the purpose of subsection (4), if any particular person that is an employer or a partnership is required to file an information return in respect of a notifiable transaction under paragraph (4)(c) or (d), the filing of an information return required under those paragraphs by the particular person in respect of the notifiable transaction in prescribed form and manner is deemed to have been made by each employee or partner of the particular person in respect of the particular transaction.

• Marginal note:Due diligence

  (6) Paragraphs (4)(a) and (b) do not apply to a person in respect of a notifiable transaction if the person has exercised the degree of care, diligence and skill in determining whether the transaction is a notifiable transaction that a reasonably prudent person would have exercised in comparable circumstances.

• Marginal note:Reasonable expectation to know

  (7) Paragraphs (4)(c) and (d) do not apply to a person in respect of a notifiable transaction unless the person knows or should reasonably be expected to know that the transaction was a notifiable transaction.

• Marginal note:Clerical or secretarial services

  (8) For greater certainty, subsection (4) does not apply to a person solely because the person provided clerical services or secretarial services with respect to the notifiable transaction.

• Marginal note:Time for filing return

  (9) An information return required under subsection (4) to be filed with the Minister for a notifiable transaction must be filed by

  • (a) a person described in paragraph (4)(a) or (b) on or before the particular day that is 90 days after the earliest of

    • (i) the day on which the person becomes contractually obligated to enter into the notifiable transaction,

    • (ii) the day on which the person enters into the notifiable transaction, and

    • (iii) if the person is described in paragraph (4)(a) and a person described in paragraph (4)(b) enters into the notifiable transaction for the benefit of the person described in paragraph (4)(a), the day on which the notifiable transaction is entered into; and

  • (b) a person described in paragraph (4)(c) or (d) no later than the earliest particular day described in paragraph (a) for a person described in paragraph (4)(a) or (b) in respect of the notifiable transaction.

• Marginal note:Clarification of reporting transactions in series

  (10) For greater certainty, if subsection (4) applies to a person in respect of each transaction that is part of a series of transactions that includes a notifiable transaction, the filing of the information return by the person that reports each transaction in the series is deemed to satisfy the obligation of the person under subsection (4) in respect of each transaction so reported.

• Marginal note:Assessments

  (11) Notwithstanding subsections 152(4) to (5), the Minister may make any assessments, determinations and redeterminations that are necessary to give effect to subsection (12).

• Marginal note:Penalty

  (12) Every person who fails to file an information return in respect of a notifiable transaction as required under subsection (4) on or before the particular day required under subsection (9) is liable to a penalty equal to

  • (a) if the person is described in paragraph (4)(a) or (b),

    • (i) if the person is a corporation and the carrying value of the corporation’s assets is greater than or equal to $50 million for its last taxation year that ends prior to the day on which the information return is required to be filed under subsection (4), $2,000 multiplied by the number of weeks during which the failure continues, to a maximum amount equal to the greater of

      • (A) $100,000, and

      • (B) 25% of the amount of the tax benefit in respect of the notifiable transaction, and

    • (ii) in any other case, $500 multiplied by the number of weeks during which the failure continues, to a maximum amount equal to the greater of

      • (A) $25,000, and

      • (B) 25% of the amount of the tax benefit in respect of the notifiable transaction; and

  • (b) if the person is described in paragraph (4)(c) or (d), the total of

    • (i) the amount of the fees charged by that person in respect of the notifiable transaction,

    • (ii) $10,000, and

    • (iii) $1,000 multiplied by the number of days during which the failure continues, up to a maximum of $100,000.

• Marginal note:Penalty – deeming rule

  (13) If a person described in both paragraphs (4)(b) and (d) is liable to a penalty under subsection (12) in respect of a notifiable transaction, the amount of the penalty is deemed to be equal to the greater of the amounts determined under paragraphs (12)(a) and (b).

• Marginal note:Penalty – non-application

  (14) For greater certainty, if any person is deemed to have filed an information return in prescribed form and manner in respect of a particular notifiable transaction under subsection (5), that person is not liable to a penalty under subsection (12) in respect of the particular transaction.

• Marginal note:Carrying value

  (15) For the purpose of subparagraph (12)(a)(i), the carrying value of the assets of a corporation is to be determined in accordance with paragraphs 181(3)(a) and (b).

• Marginal note:Return – not an admission

  (16) The filing of an information return under this section by a person in respect of a notifiable transaction is not an admission by the person that any transaction is part of a series of transactions.

• Marginal note:Application of sections 231 to 231.3

  (17) Without restricting the generality of sections 231 to 231.3, even if a return of income has not been filed by a taxpayer under section 150 for a taxation year of the taxpayer in which a transaction occurs that is relevant to the tax benefit referred to in paragraph (4)(a) that results (or is expected to result) from a notifiable transaction, sections 231 to 231.3 apply, with such modifications as the circumstances require, for the purpose of permitting the Minister to verify or ascertain any information in respect of the notifiable transaction.

• Marginal note:Solicitor-client privilege

  (18) For greater certainty, this section does not require the disclosure of information if it is reasonable to believe that the information is subject to solicitor-client privilege.

Marginal note:Definitions

• 237.5 (1) The following definitions apply in this section.

  consolidated financial statements

  consolidated financial statements has the same meaning as in subsection 233.8(1). (états financiers consolidés)

  person

  person includes a partnership. (personne)

  relevant financial statements

  relevant financial statements of a corporation for a taxation year, means audited financial statements that are prepared

  • (a) in respect of

    • (i) the corporation, or

    • (ii) a group, of which the corporation is a member, of two or more persons required to prepare consolidated financial statements for financial reporting purposes under applicable accounting principles;

  • (b) in accordance with

    • (i) International Financial Reporting Standards, or

    • (ii) other country-specific generally accepted accounting principles (such as U.S. generally accepted accounting principles) relevant for corporations that are listed on a stock exchange outside Canada; and

  • (c) for a period of time that ends in the taxation year. (états financiers de référence)

  reportable uncertain tax treatment

  reportable uncertain tax treatment, of a corporation for a taxation year, means a tax treatment of the corporation in respect of which uncertainty is reflected in relevant financial statements of the corporation for the year. (traitement fiscal incertain à déclarer)

  reporting corporation

  reporting corporation, for a taxation year, means a corporation if

  • (a) the corporation has relevant financial statements for the year;

  • (b) the carrying value of the corporation’s assets is greater than or equal to $50 million at the end of the year; and

  • (c) the corporation is required to file a return of income for the year under section 150. (société déclarante)

  tax treatment

  tax treatment, of a corporation, means a treatment in respect of a transaction, or series of transactions, that the corporation uses, or plans to use, in a return of income or an information return (or would use in a return of income or an information return if a return of income or an information return were filed) and includes the corporation’s decision not to include a particular amount in a return of income or an information return. (traitement fiscal)

  transaction

  transaction has the same meaning as in subsection 245(1). (opération)

• Marginal note:Filing requirement

  (2) Every reporting corporation for a taxation year that has one or more reportable uncertain tax treatments for the year must file with the Minister an information return in prescribed form and containing prescribed information in respect of each reportable uncertain tax treatment of the corporation for the year.

• Marginal note:Filing requirement – deadline

  (3) An information return required under subsection (2) to be filed by a corporation for a taxation year must be filed with the Minister on or before the corporation’s filing-due date for the year.

• Marginal note:Assessments

  (4) Notwithstanding subsections 152(4) to (5), the Minister may make any assessments, determinations and redeterminations that are necessary to give effect to subsection (5).

• Marginal note:Penalty

  (5) Every corporation that fails to report a reportable uncertain tax treatment on an information return as required under subsection (2) on or before the day required under subsection (3) is liable to a penalty, for each such failure to report, equal to $2,000 multiplied by the number of weeks during which the failure continues, up to a maximum of $100,000.

• Marginal note:Due diligence

  (6) A corporation required to file an information return in respect of a reportable uncertain tax treatment is not liable for a penalty under subsection (5) if the corporation has exercised the degree of care, diligence and skill to prevent the failure to file that a reasonably prudent person would have exercised in comparable circumstances.

• Marginal note:Return – not an admission

  (7) The filing of an information return in respect of a reportable uncertain tax treatment as required under subsection (2) by a corporation is not an admission by the corporation that

  • (a) the tax treatment is not in accordance with this Act or the regulations; or

  • (b) any transaction is part of a series of transactions.

• Marginal note:Application of sections 231 to 231.3

  (8) Without restricting the generality of sections 231 to 231.3, if a corporation is required to file an information return under subsection (2) in respect of a reportable uncertain tax treatment of the corporation for a taxation year, even if a return of income has not been filed by the corporation under section 150 for the year, sections 231 to 231.3 apply, with such modifications as the circumstances require, for the purpose of permitting the Minister to verify or ascertain any information in respect of the reportable uncertain tax treatment including, for greater certainty, any information relating to any transaction, or series of transactions, to which the reportable uncertain tax treatment relates.

• Marginal note:Carrying value

  (9) For the purposes of the definition reporting corporation in subsection (1), the carrying value of the assets of a corporation is to be determined in accordance with paragraphs 181(3)(a) and (b).