The Canadian chapter of the Society of Trust and Estate Practitioners (known as STEP Canada) has significant concerns about the federal Department of Finance’s recently released draft legislation for reporting “aggressive transactions” under proposed section 273.3 of the Income Tax Act.

STEP Canada believes that the proposed reporting regime for “aggressive transactions” will have significant implications for its members and their clients.

The approach taken by the draft legislation is to automatically equate a “reportable transaction” with an “avoidance transaction”, STEP Canada notes.

Under established law, taxpayers are permitted to arrange their affairs to pay the least amount of tax possible, as long as they do not engage in tax evasion. Under the proposed legislation, assuming a tax benefit arises from the transaction, a taxpayer will be required to determine whether the transaction was undertaken primarily for bona fide purposes other than to obtain the tax benefit, and if so, report it.

STEP Canada says this is likely to result in the taxpayer not reporting the transaction as the CRA will characterize the “reportable transaction” as an “avoidance transaction”.

To raise awareness of the serious impact the proposed legislation could have for trust and estate practitioners and their clients, STEP Canada is holding a national webcast at 11:00 ET on Monday, November 15.

A panel of senior practitioners will provide important commentary and field questions about the potential impact of proposed legislation.

During the two-hour webcast, the moderator will be accepting questions from webcast participants.

Members can sign up for the webcast by following the link on STEP Canada’s website: www.step.ca.

IE