Canadian individuals and businesses should prepare now to report certain transactions under expanded new mandatory disclosure rules. These expanded rules generally require individuals, corporations, trusts and partnerships to promptly disclose certain “reportable transactions” and “notifiable transactions” to the CRA, among other new obligations. Finance recently updated the rules for these transactions with new relieving amendments, including to extend the disclosure deadline to within 90 days (from 45 days) of entering into the transaction and narrow the scope of reportable transactions. These rules will apply to transactions entered into on or after the date the legislation to enact these changes receives Royal Assent, which is expected soon. Certain corporate taxpayers will also have to disclose information about uncertain tax treatments reflected in their financial statements for taxation years that begin on or after January 1, 2023.
In light of these reporting requirements, taxpayers need to quickly assess whether they may have new reporting obligations under these rules. In particular, taxpayers should identify any planned transactions that may occur once these rules come into effect and implement a process to identify and track all transactions and uncertain tax treatments that must be reported. Taxpayers who fail to make the proper disclosures may be subject to onerous penalties as well as extended reassessment periods. Taxpayers should also be aware of Quebec’s disclosure rules that may apply to their situation.
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