The Expanded Mandatory Disclosure Rules: An In-Depth Discussion

The expanded mandatory disclosure rules that came into effect on June 22, 2023 capture a broad range of business transactions and impose reporting obligations on taxpayers, advisors, and promoters alike.[1] These rules require reporting of: (1) reportable transactions, (2) notifiable transactions, and (3) uncertain tax treatments.

Financial penalties and other adverse consequences arising on a failure to file the applicable information return can be severe. For example, advisors can be liable for a penalty in excess of their fees (even if a late filing is made). Further, a taxpayer’s “normal reassessment period” (3 years for an individual or CCPC and 4 years otherwise) will effectively not start to run with respect to a reportable transaction, notifiable transaction or uncertain tax treatment until the date that the taxpayer files the information return.

While being in compliance with their own filing obligations under these rules will be critical for advisors, advisors must also be aware that there may be circumstances where the advisor will have a duty to advise their clients (promoters, taxpayers and perhaps other advisors) of the clients’ obligations under these rules.