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Confidentiality Policy When we may or must “rat you out”​

Tax Avoidance

The Budget Implementation Act 2023 has expanded the mandatory disclosure rules in the Income Tax Act (ITA). The ITA amendments will:

  • Expand the existing reportable transactions regime significantly, including broadening the definition of reportable “avoidance transactions”, and reducing from 3 to 1 the number of hallmarks that must be present to require the reporting of an avoidance transaction.
  • Create a new category of “notifiable transactions” that must be reported to the CRA. Notifiable transactions are transactions designated by the Ministers of Finance or National Revenue and transactions that are the same or substantially similar to those designated transactions.
  • Remove the “reliance” or “relieving” rule, which deemed full and accurate reporting by one party to be reporting by all parties.
  • Create new penalties for non-reporting by us, set at the total of:
    • The fees charged in respect of the transaction,
    • $10,000, and
    • $1,000 multiplied by the number of days the failure continues up to a maximum of $100,000.

In most cases, reporting obligations apply to transactions entered into after June 22,2023, when the Act received Royal Assent. Licensees must report to the CRA within 90 days of the day the taxpayer becomes contractually obligated to enter into the transaction or enters into it.  Failure by any person to file a report as and when required will extend the normal period in which the transaction may be reassessed until three or four years (depending on the taxpayer) after all applicable reporting requirements have been met.

To the extent our reporting obligation conflicts with Section 3.3 Confidentiality of the Rules of Professional Conduct, we must chose beteween your possible complaint about our conduct or the possible exposure to the draconian penalties that may be imposed on us by the CRA. Which would you choose? We will advise you of our decision.

When required by law or by order

This is self explanitory.

Imminent Harm

When we believe on reasonable grounds that there is an imminent risk of death or serious bodily harm, and disclosure is necessary to prevent the death or harm. Current versions of the rules are found at Chapter 3 | Law Society of Ontario (lso.ca) and tax-alert-mandatory-disclosures_june-2023_final.pdf (grantthornton.ca)

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