The Canada Revenue Agency has released the new form that advisors, tax promoters and taxpayers must use to disclose reportable and notifiable transactions under the federal government’s expanded mandatory disclosure regime.
Published by the CRA on its website this week, Form RC312 Reportable Transaction and Notifiable Transaction Information Return (2023 and later tax years) is a revised version of an already existing form that must now be used for all transactions entered into on or after June 22, 2023, the date the new legislation received royal assent.
The new, expanded mandatory disclosure regime gives the agency “timely, comprehensive and relevant information on aggressive tax planning strategies,” which helps it to identify and respond to “tax risks” earlier, the CRA indicated in guidance published earlier this month.
John Oakey, vice-president of taxation with CPA Canada in Halifax, said in an email that the previous mandatory disclosure rules resulted in a limited number of RC312 forms filed with the CRA. However, under the expanded mandatory disclosure regime, Oakey said he anticipates an increase.
Under the previous reportable transaction rules, avoidance transactions — those whose primary purpose is a tax benefit — only needed to be reported to the CRA when two of three hallmarks were present in the transaction: contingent fee arrangements, confidential protection or contractual protection.
Under the new legislation, a tax benefit needs only to be one of the main purposes of the transaction, and only one of the hallmarks must be present for the transaction to be reportable.
Under the new category of notifiable transactions, advisors and promoters must report transactions that are identical or substantially similar to ones the CRA has previously identified as potentially abusive.
Also this week, the CRA released Form RC3133 Reportable Uncertain Tax Treatments Information Return (2023 and later tax years), a new corporate information return under the expanded mandatory disclosure regime.