RC312 - Reportable Transaction and Notifiable Transaction Information Return (2023 and later tax years)

The following instructions are taken from the form.

Instructions

Amended return

Submit an amended return only if there was an error on a previous disclosure.

Effective date

This return applies to reportable transactions and notifiable transactions that are entered into after June 21, 2023.

Who has to file for reportable transactions

As per subsection 237.3(2), an information return, in respect of a reportable transaction, must be filed with the Minister by:

  1. every person for whom a tax benefit results, or for whom a tax benefit is expected to result based on the person's tax treatment (see note 8) of the reportable transaction, from

  1. the reportable transaction,

  2. any other reportable transaction that is part of a series of transactions that includes the reportable transaction, or

  3. a series of transactions that includes the reportable transaction;

  1. every person who entered into, for the benefit of a person described in paragraph (a), an avoidance transaction that is a reportable transaction

  2. 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

  1. 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).

For information on the circumstances in which transactions do not need to be reported, go to canada.ca/mandatory-disclosure-rules.

Who has to file for notifiable transactions

As per subsection 237.4(4), an information return, in respect of a notifiable transaction, must be filed with the Minister by:

  1. every person for whom a tax benefit results, or for whom a tax benefit is expected to result based on the person's tax treatment (see note 8) of the notifiable transaction, from

  1. the notifiable transaction,

  2. any other notifiable transaction that is part of a series of transactions that includes the notifiable transaction, or

  3. the series of transactions;

  1. every person who has entered into, for the benefit of a person described in paragraph (a), the notifiable transaction

  2. every advisor or promoter in respect of the notifiable transaction; and

  3. every person who is not dealing at arm's length with an advisor or promoter described in paragraph (c) and who is or was entitled, either immediately or in the future and either absolutely or contingently, to a fee in respect of the notifiable transaction.

For information on the circumstances in which transactions do not need to be reported, go to canada.ca/mandatory-disclosure-rules.

Reporting transactions in a series

The legislation provides that a person will be deemed to have satisfied the reporting obligation in respect of each transaction in a series if the person files an information return that discloses all of those transactions. This means that the person has to file only one information return in respect of the series of transactions to satisfy that person's reporting obligation, and not a separate information return for each transaction in the series.

The filing of this return is for information purposes and is not an admission that any reportable transaction or any notifiable transaction is part of a series of transactions.

Reportable Transactions - Recurring Tax Benefit and Transactions

A recurring tax benefit only needs to be reported once if it is the same tax benefit that recurs and there are no new transactions.

In Part 4, tick the box for yes in response to "Do you anticipate recurring tax benefits?" at the time the initial transaction is required to be reported to outline any subsequent anticipated relevant periods the tax benefit would recur.

Advance income tax ruling

Transactions where a favourable advance income tax ruling has been issued would satisfy the reporting obligation where a copy of the ruling has been attached to this return. There would be no need for detailed reporting, other than the identification of the reporting person in Part 1.

Any transaction subject to the reportable transaction regime but not disclosed in the advance tax ruling has to be reported.

Filing deadline

A duly completed return must be filed with the Minister of National Revenue no later than 90 days from the earlier of:

  • the time that the transaction is entered into

  • the time of becoming contractually obligated to enter into the transaction

If part of a series of transactions, indicate the filing deadline date of the first transaction.

Failure to file on time

Penalty

When a return is not filed on time, every person who should have filed the return is liable for a penalty. According to subsections 237.3(8) or 237.4(12), if you fail to file this return in respect of a reportable transaction or a notifiable transaction as required on or before the day required under subsection 237.3(5) and 237.4(9), you should calculate and pay a late-filing penalty if applicable.

If you do not believe that you are responsible to pay the late filing penalty (e.g. due diligence defence, etc.) attach a letter describing as such.

Tax benefit disallowed

For reportable transactions only, in addition to the penalty, the tax benefit may be disallowed (see subsection 237.3(6)).

Extended reassessment period

Where this return has not been filed as and when required, the reassessment period may be extended.

Filing this return

Send your completed return with all supporting documents to:

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

Your 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 of the following paragraphs (hallmarks) applies in respect of the avoidance transaction or series:

  1. an advisor or a promoter (see notes 3 and 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) (other than a fee in relation to a prescribed form required to be filed under subsection 37(11)) that to any extent

  1. is based on the amount of a tax benefit (see note 6) that results, or would result but for section 245, 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, 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 regarding 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, and the prohibition on disclosure provided under the confidential protection provides confidentiality in respect of a tax treatment in relation to the avoidance transaction or series,

  1. in the case of an advisor, from a person to whom the advisor has provided any assistance or advice with respect to 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).

Confidential protection – This 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. The disclaiming or restricting of an advisor's liability shall not be considered confidential protection if it does not prohibit the disclosure of the details or structure of the transaction or series.

Contractual protection – This means

  1. any form of insurance or other protection, including, without limiting the generality of the foregoing, an indemnity, compensation or a guarantee that,

    1. 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 in respect of a tax benefit from the transaction or series; and

  1. is not

  1. standard professional liability insurance, or

  2. integral to an agreement between persons acting at arm's length for the sale or transfer of all or part of a business (either directly or through the sale or transfer of one or more corporations, partnerships or trusts) where it is reasonable to consider that the insurance or protection

  1. is intended to ensure that the purchase price paid under the agreement takes into account any liabilities of the business immediately prior to the sale or transfer, and

  2. is obtained primarily for purposes other than to achieve any tax benefit from the transaction or series; and

  1. 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 manner whatever, to a person in the course of a dispute in respect of a tax benefit from the transaction or series.

Notifiable transaction, at any time means

  1. a transaction that is the same as, or substantially similar (see note 7) to, a transaction that is designated at that time by the Minister under subsection 237.4(3); and

  2. a transaction in a series of transactions that is the same as, or substantially similar (see note 7) to, a series of transactions that is designated at that time by the Minister under subsection 237.4(3).

Notes

  1. For the purposes of this return, a transaction includes an arrangement or event.

  2. An avoidance transaction means a transaction if it may reasonably be considered that one of the main purposes of the transaction, or of a series of transactions of which the transaction is a part, is to obtain a tax benefit.

  3. Advisor in respect of a reportable transaction, means each person who provides, directly or indirectly in any manner whatever, any contractual protection in respect of the transaction or series, or any assistance or advice with respect to 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).

    Advisor in respect of a notifiable transaction, means each person who provides, directly or indirectly in any manner whatever, any assistance or advice with respect to creating, developing, planning, organizing, or implementing the notifiable transaction, to another person (including any person who enters into the notifiable 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 has the same meaning as in subsection 245(1):

  1. a reduction, avoidance or deferral of tax or other amount payable under the Act, and includes a reduction, avoidance or deferral of tax or other amount that would be payable under the Act but for a tax treaty,

  2. an increase in a refund of tax or other amount under the Act, and includes an increase in a refund of tax or other amount under the Act as a result of a tax treaty, or

  3. a reduction, increase or preservation of an amount that could at a subsequent time

  1. be relevant for the purpose of computing an amount referred to in paragraph (a) or (b), and

  2. result in any of the effects described in paragraph (a) or (b).

  1. The term substantially similar

  1. includes any transaction, or series of transactions, in respect of which a person is expected to obtain the same or similar types of tax consequences (as defined in subsection 245(1)) and that is either factually similar or based on the same or similar tax strategy; and

  2. is to be interpreted broadly in favour of disclosure.

  1. Tax treatment, of a person, means a treatment in respect of a transaction, or series of transactions, that the person uses, or plans to use, in a return of income or an information return (or would use in a return of income or an information return if a return of income or an information return were filed) and includes the person's decision not to include a particular amount in a return of income or an information return.

  2. Subsections 237.3(17) and 237.4(18) provide that, for greater certainty, information is not required to be disclosed for the purposes of section 237.3 and 237.4 if it is reasonable to believe that the information is subject to solicitor-client privilege.