Reportable Transactions

Bill C-47 received Royal Assent on June 22, 2023, bringing into effect the new expanded reportable transaction rules. A failure to report as required by the new rules could result in substantial penalties for both taxpayers and their advisors.


The reportable transaction rules require certain persons to file information returns with the Canada Revenue Agency (“CRA”) in respect of an “avoidance transaction” if at least one of three hallmarks are met. Very generally, these hallmarks may be met if:


  • An advisor or promoter (or a non-arm’s length person) has an entitlement (absolutely or contingently) to a fee that is based on the amount of a tax benefit, or is contingent upon obtaining a tax benefit, or on the number of persons who participate in the transaction (subject to certain limited exceptions);
  • An advisor or promoter (or a non-arm’s length person) obtains confidential protection, and the prohibition on disclosure provides confidentiality in respect of the tax treatment in relation to the avoidance transaction; or
  • The person, an advisor or promoter (or a non-arm’s length person) has or had contractual protection in respect of the transaction.


An “avoidance transaction” is broadly defined, and could include any transaction where one of the main purposes of the transaction was to obtain a tax benefit, which could include a reduction, avoidance or deferral of tax, or an increase in a refund. Any transaction that is structured to minimize tax could potentially be an avoidance transaction based on this definition.


“Confidential protection” is defined as anything that prohibits the disclosure to any person or to the CRA of the details or structure of the transaction under which a tax benefit results.


The required information return must be filed with the CRA within the specified time period, which will generally be 90 days after the transaction.


Who is required to file?


  • Any person for whom a tax benefit results (or is expected to result) based on the person’s tax treatment of the reportable transaction,
  • any person who has entered into an avoidance transaction for that person’s benefit,
  • any advisor or promoter in respect of the reportable transaction (if their fees are based on obtaining a tax benefit, as described above, or are in respect of contractual protection), and
  • any person who does not deal at arm’s length with such advisor or promoter (and was entitled to similar fees)


The penalties for a failure to file the information return are significant and generally mirror the penalties under the notifiable transaction rules.


In addition, if a taxpayer fails to file the required information return, the CRA may apply the general anti-avoidance rule (commonly referred to as the “GAAR”) to the transaction to deny the tax benefit even if there is no misuse or abuse of the Act.


In most cases, reporting obligations apply to transactions entered into after June 22,2023, when the Act received Royal Assent.


According to the Budget Implementation Act, 2023, disclosure of information is not required if it is reasonable to believe that the information is subject to solicitor-client privilege.


Lawyers should consider whether any of the information required by the CRA is subject to solicitor-client privilege and advise clients that they will not report that information.