Mandatory Disclosure of Transactions Where There Is a High Risk of Tax Avoidance

There are two specific situations where the contractual relationship between a taxpayer or a partnership and an adviser could constitute an element associated with aggressive tax planning (ATP). This is the case where the contract:

binds the taxpayer or the partnership to confidentiality regarding the tax planning scheme resulting in a tax benefit or an impact on income
defines the remuneration the adviser is to receive as conditional on or in proportion to a tax benefit obtained

In these situations, the taxpayer or partnership, as applicable, must disclose the planning scheme resulting for a taxation year or a fiscal period in:

a tax benefit of $25,000 or more for the taxpayer
an impact on the income of the taxpayer or of the partnership of $100,000 or more

Timeframe for making a mandatory disclosure

You must make a mandatory disclosure no later than the deadline for filing the income tax return, or the information return, for the taxation year or fiscal period, as the case may be, in which the tax benefit was realized or there was an impact on the income.

You can make your mandatory disclosure by

completing form TP-1079.DI-V, Mandatory or Preventive Disclosure of Tax Planning or
using the File the Tax Planning Disclosure Form online service

Important

You must provide the following:

a complete and detailed description of the facts relating to the tax planning scheme
a statement of the tax consequences resulting from the transaction

The description of the facts and tax consequences resulting from the planning must be sufficiently detailed so that we can understand and analyze them.

Timeframe for making an assessment

When the mandatory disclosure form is duly completed and sent to us by the prescribed deadline, we will have the information necessary to determine whether the general anti-avoidance rule (GAAR) applies to the situation.

If the GAAR applies, we must make an assessment within three years following the day the notice of original assessment is sent. This period extends to four years where the taxpayer is a mutual fund trust or a corporation other than a Canadian-controlled private corporation.