The Canada Revenue Agency has clarified that simply including a common clause in contracts won’t trigger a reporting obligation under the new mandatory disclosure regime.<\/p>\n
The passage of Bill C-47<\/a>, which received royal assent on June 22, dramatically lowered the threshold<\/a> for what the CRA considers an \u201cavoidance transaction\u201d and created a reporting obligation<\/a> for taxpayers and their advisors when one of the following hallmarks is present:<\/p>\n
With the 90-day deadline — Sept. 20 — approaching for the first mandatory disclosures under the new law, many accountants feared that including limitation-of-liability provisions in their professional engagement letters would trigger the \u201ccontractual protection\u201d hallmark.<\/p>\n
In late August, the CRA updated its administrative guidance<\/a> to confirm that such a clause \u201cwould normally not, in and of itself, trigger a reportable transaction reporting hallmark,\u201d as long as its purpose was related to professional indemnity insurance.<\/p>\n