RC312 - Reportable Transaction Information Return (2011 and later tax years)

The following instructions are taken from the form.

Instructions

Purpose of return

File this return if you are a taxpayer (including a partnership), an advisor or a promoter (including any non-arm's length parties) that has to disclose information about a transaction (see note 1) or a series of transactions that meet the definition of a reportable transaction (see page 8).

Provincial requirements

For provinces with corresponding legislation, refer to the applicable provincial legislation for provincial requirements and definitions.

Effective date

This return applies to reportable transactions that are entered into after 2010 or that are part of a series of transactions that began before 2011 and was completed after 2010.

Who has to file

An information return must be filed with the Minister by:

  1. Every person for whom a tax benefit results, or would result but for section 245 of the Act, from the reportable transaction, from any other reportable transaction that is part of a series of transactions that includes the reportable transaction or from the series of transactions;
  2. Every person who entered into, for the benefit of a person described in paragraph (a), an avoidance transaction that is a reportable transaction;
  3. Every advisor or promoter who is or was entitled, either immediately or in the future and either absolutely or contingently, to a fee for any of those transactions that are described in paragraphs (a) or (c) of the definition of reportable transaction; and
  4. every person who is not dealing at arm's length with an advisor or promoter in respect of the reportable transaction and who is or was entitled, either immediately or in the future and either absolutely or contingently, to a fee that is referred to in paragraph (c).

If a person who has to file a return for the transaction does so with full and accurate disclosure and elects to file on behalf of everyone else required to file (see certification area), we consider the disclosure to have been made by each person who must file for the transaction. Similarly, if the transaction is part of a series, we consider the full and accurate filing of a return by the person that reports each transaction in the series, with proper election, to satisfy the obligation of each person who must file for the series.

Filing deadline

A duly completed return must be filed with the minister of national revenue on or before June 30 of the calendar year that follows the calendar year in which the transaction first became a reportable transaction (see note 9). The filing of this return is for information purposes and is not an admission that section 245 of the Act applies to any transaction or to any transaction that is part of a series.

Failure to file on time

When a return is not filed on time, every person who should have filed the return is liable to a penalty. The penalty is equal to the total of each amount that is a fee to which an advisor or a promoter (or any person who does not deal at arm's length with the advisor or the promoter) of the reportable transaction is or was entitled, either immediately or in the future and either absolutely or contingently, to receive, if the fee is attributable to the fee (see note 5) hallmark or contractual protection hallmark. If more than one person is liable to a penalty, each of those persons are jointly and severally, or solidarily, liable to pay the penalty. However, the liability of an advisor or a promoter, or a person with whom the advisor or promoter does not deal at arm's length, will not exceed the total of each amount that is a fee that they are or may be entitled to in respect of the transaction. Further, a person is not liable for a penalty if that person 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.

In addition to the penalty, any tax benefit that would result directly or indirectly from the avoidance transaction will be denied if:

  1. the obligation to file an information return has not been met;
  2. the person is liable to a penalty as a result of the failure to file an information return; and
  3. the penalty or interest has not been paid.

Extended reassessment period

For tax years ending after March 20, 2013, where the RC312 return has not been filed as and when required, the reassessment period is extended by three years after the date, if any, that the information return is filed. A waiver in respect of this extended reassessment period may be filed with the CRA within this additional three-year period. The scope of an assessment, reassessment, or additional assessment during the extended reassessment period in respect of a taxpayer’s tax year is limited to the extent that it can reasonably be regarded as relating to the deduction, claim, or tax benefit.

Filing this return

File this return separately from your T1, T2, T3, or partnership tax return. Before you file this return, make a copy for your records. Mail the original or amended return, and any other information, to:

Winnipeg Tax Centre
Data Assessment and Evaluation Programs
Validation and Verification Section
Foreign Reporting Returns
66 Stapon Road
Winnipeg MB  R3C 3M2

Each return will undergo a preliminary review. We may contact you if more information is needed. We may select some returns for a more comprehensive review.

Definitions

Reportable transaction – This means an avoidance transaction (see note 2) that is entered into by or for the benefit of a person, and each transaction that is part of a series of transactions that includes the avoidance transaction, if at any time any two of the following paragraphs (hallmarks) apply in respect of the avoidance transaction or series:

  1. an advisor (see note 3) or a promoter (see note 4), or any person who does not deal at arm's length with the advisor or promoter, has or had an entitlement, either immediately or in the future and either absolutely or contingently, to a fee (see note 5) that in any way
  1. is based on the amount of a tax benefit (see note 6) that results, or would result but for section 245 of the Act, from the avoidance transaction or series,
  2. is contingent upon the obtaining of a tax benefit that results, or would result but for section 245 of the Act, from the avoidance transaction or series, or may be refunded, recovered, or reduced, in any manner whatever, based upon the failure of the person to obtain a tax benefit from the avoidance transaction or series, or
  3. is attributable to the number of persons
  1. who participate in the avoidance transaction or series, or in a similar avoidance transaction or series, or
  2. who have been provided access to advice or an opinion given by the advisor or promoter about the tax consequences from the avoidance transaction or series, or from a similar avoidance transaction or series,
  1. an advisor or a promoter in respect of the avoidance transaction or series, or any person who does not deal at arm's length with the advisor or promoter, obtains or obtained confidential protection (see note 7) in respect of the avoidance transaction or series, or
  1. in the case of an advisor, from a person to whom the advisor has provided any assistance or advice in respect of the avoidance transaction or series under the terms of an engagement of the advisor by that person to provide such assistance or advice, or
  2. in the case of a promoter, from a person
  1. to whom an arrangement, plan or scheme has been promoted or sold in the circumstances described in paragraph (a) of the definition of promoter (see note 4),
  2. to whom a statement or representation described in paragraph (b) of the definition of promoter (see note 4) has been made, or
  3. from whom consideration described in paragraph (c) of the definition of promoter (see note 4) has been received, or
  1. either
    1. the person (in this subparagraph referred to as the particular person), another person who entered into the avoidance transaction for the benefit of the particular person or any other person who does not deal at arm's length with the particular person or with a person who entered into the avoidance transaction for the benefit of the particular person, has or had contractual protection in respect of the avoidance transaction or series, otherwise than as a result of a fee described in paragraph (a), or
    2. an advisor or promoter in respect of the avoidance transaction or series, or any person who does not deal at arm's length with the advisor or promoter, has or had contractual protection in respect of the avoidance transaction or series, otherwise than as a result of a fee described in paragraph (a).

A reportable transaction does not include a transaction that is, or is part of a series of transactions that includes, the acquisition of a tax shelter or the issuance of a flow-through share for an information return which a return has been filed with the minister of national revenue unless it is reasonable to conclude that one of the main reasons for the acquisition of a tax shelter, or the issuance of a flow through share, was to avoid the reportable transactions provisions under section 237.3 of the Act.

Confidential protection – This refers to anything that prohibits the disclosure to any person or to the Minister of the details or structure of the transaction or series under which a tax benefit results, or would result but for section 245 of the Act (see note 7).

Contractual protection – This refers to any form of insurance (other than standard professional liability insurance) or other protection, including, without limiting the generality of the foregoing, an indemnity, compensation or a guarantee that, either immediately or in the future and either absolutely or contingently,

  1. protects a person against a failure of the transaction or series to achieve any tax benefit from the transaction or series, or
  2. pays for or reimburses any expense, fee, tax, interest, penalty or similar amount that may be incurred by a person in the course of a dispute about a tax benefit from the transaction or series, and

any form of undertaking provided by a promoter, or by any person who does not deal at arm's length with a promoter, that provides, either immediately or in the future and either absolutely or contingently, assistance, directly or indirectly in any way, to a person in the course of a dispute about a tax benefit from the transaction or series.

Notes

  1. For the purposes of this return, a transaction includes an arrangement or event.
  2. An avoidance transaction means any transaction that, but for this definition, would result, directly or indirectly, in a tax benefit, unless the transaction may reasonably be considered to have been undertaken or arranged primarily for bona fide purposes other than to obtain the tax benefit; or that is part of a series of transactions, which series, but for this definition, would result, directly or indirectly, in a tax benefit, unless the transaction may reasonably be considered to have been undertaken or arranged primarily for bona fide purposes other than to obtain the tax benefit.
  3. An advisor, in respect of a transaction or series of transactions, means each person who provides, directly or indirectly, in any way, any contractual protection in respect of a transaction or series of transactions, or any assistance or advice for creating, developing, planning, organizing or implementing the transaction or series to another person (including any person who enters into the transaction for the benefit of another person).

  4. A promoter, in respect of a transaction or series of transactions, means each person who:

    1. promotes or sells (whether as a principal or agent and whether directly or indirectly) an arrangement, plan or scheme (referred to in this definition as an "arrangement"), if it may reasonably be considered that the arrangement includes or relates to the transaction or series;
    2. makes a statement or representation (whether as a principal or agent and whether directly or indirectly) that a tax benefit could result from an arrangement, if it may reasonably be considered that
  1. the statement or representation was made in furtherance of the promoting or selling of the arrangement, and
  2. the arrangement includes or relates to the transaction or series; or
  1. accepts (whether as a principal or agent and whether directly or indirectly) consideration in respect of an arrangement referred to in paragraph (a) or (b).

  1. Fee, in respect of a transaction or series of transactions, means any consideration that is, or could be, received or receivable, directly or indirectly in any way, by an advisor or a promoter, or any person who does not deal at arm's length with an advisor or promoter, for:

    1. providing advice or an opinion with respect to the transaction or series;
    2. creating, developing, planning, organizing or implementing the transaction or series;
    3. promoting or selling an arrangement, plan or scheme that includes, or relates to, the transaction or series;
    4. preparing documents supporting the transaction or series, including tax returns or any information returns to be filed under the Act; or
    5. providing contractual protection.
  1. Tax benefit means a reduction, avoidance or deferral of tax or other amount payable under the Act or an increase in a refund of tax or other amount under the Act. Such a benefit includes a reduction, avoidance or deferral of tax or other amount that would be payable under the Act but for a tax treaty or an increase in a refund of tax or other amount under the Act as a result of a tax treaty.
  2. Confidential protection, in respect of a transaction or series of transactions, means anything that prohibits the disclosure to any person or to the Minister of the details or structure of the transaction or series under which a tax benefit results, or would result but for section 245 of the Act. For an avoidance transaction that is part of a series of transactions that began before 2011, this does not include a prohibition on disclosure that relates to an agreement entered into before March 4, 2010, between an advisor and his or her client for the provision of accounting, legal or similar tax advisory services. For greater certainty, the disclaiming or restricting of an advisor's liability will not be considered confidential protection if it does not prohibit the disclosure of the details or structure of the transaction or series.
  3. A lawyer who is an advisor in respect of a reportable transaction is not required to disclose in an information return for the transaction any information for which the lawyer, on reasonable grounds, believes that a client of the lawyer has solicitor-client privilege.
  4. If you were required to file a return before July 1, 2013, we consider it to be filed before that day if you filed it on or before October 23, 2013.