Generally, the notifiable transaction rules will trigger a reporting obligation where a person enters into a transaction or series of transactions that is the same as, or substantially similar to, certain transactions or series of transactions that have been “designated” by the Minister of National Revenue, with the concurrence of the Minister of Finance.
The rules are drafted broadly and are to be interpreted broadly in favour of disclosure.
The obligation to report can apply to a any person for whom a tax benefit arises based on the transaction at issue, and every advisor in respect of that transaction (e.g. lawyers, accountants).
There is currently no prescribed form for this reporting, although it has the potential to be very detailed and onerous.
The deadline to report generally is 45 days after a person enters into the transaction or becomes contractually obligated to do so.
Penalties for non-compliance can be the greater of $25,000 and 25% of the tax benefit – and for advisors, penalties can include their related fees, plus a maximum of an additional $110,000.
Also, failing to report a notifiable transaction allows the Minister to assess or reassess a taxpayer outside of the normal reassessment period.