Tax Insights: Mandatory disclosure rules ─ Taxpayers, advisers and promoters need to prepare

June 23, 2023

Issue 2023-17R

June 23, 2023 update: On June 22, 2023, Bill C-47, which includes the legislation to implement the enhanced mandatory disclosure rules (MDR), received royal assent. The royal assent version of this legislation is identical to the MDR legislation that was tabled on April 20, 2023 (and discussed in our May 2, 2023 Tax Insights). As a result:

  • the revised “reportable transaction” rules will apply to transactions entered into after royal assent 
  • the new requirement to report “uncertain tax treatments” will apply to tax years beginning after 2022, but specific financial penalties for late-filing apply only to tax years beginning after royal assent

While the new requirement to report "notifiable transactions" will technically apply to transactions entered into after royal assent, no transactions have yet been officially designated for this purpose. 

The remainder of this Tax Insights was published on May 2, 2023. It has not been altered to reflect the enactment of Bill C-47.


In brief

On April 20, 2023, the federal government tabled Bill C‑471, which includes the legislation to implement revised and expanded disclosure rules relating to tax avoidance transactions and uncertain tax treatments, commonly referred to as the mandatory disclosure rules (MDR). These measures were initially announced in the 2021 federal budget, with draft legislative proposals released on February 4, 2022 and August 9, 2022.

MDR is comprised of three distinct regimes:

  • reportable transactions, triggered by generic hallmarks, to apply to transactions entered into after royal assent
  • notifiable transactions, triggered by resemblance to specifically designated transactions, to apply to transactions entered into after royal assent
  • uncertain tax treatments, triggered by financial statement recognition, to apply to tax years beginning after 2022 (specific penalties for late‑filing to apply only to tax years beginning after royal assent)

The reportable and notifiable transaction regimes require information reporting by taxpayers and any relevant advisers or promoters. The deadlines are generally 90 days from the implementation date of the relevant transactions. Where a transaction is part of a series of transactions, it is possible to file one form that discloses all such transactions.

The uncertain tax treatments regime applies only to large corporate taxpayers (generally those with assets of at least $50 million) and the reporting deadline is the same as for the corporate tax return (i.e. six months after year end).

As the coming into force of all three MDR regimes is tied to when Bill C‑47 receives royal assent, which is expected to occur in late June 2023, taxpayers, advisers and promoters should start preparing for and complying with these rules.

In detail

Reportable transactions

Existing rules

Current rules require taxpayers to report a transaction if:

  • it is considered an “avoidance transaction,” as that term is defined for the purposes of the general anti‑avoidance rule, and
  • it meets at least two of three hallmarks (i.e. a tax‑benefit‑based fee, confidentiality protection and contractual protection)

The reporting is required to be made on or before June 30th of the calendar year following the calendar year in which it first becomes a reportable transaction. While the regime includes reporting obligations for advisers and promoters who are entitled to certain types of fees (generally those that are linked to the tax benefit sought) in respect of the transaction, a “single filer” rule deems the reporting obligations of all persons required to file an information return for a transaction to be satisfied when any such person files the relevant return.

Revised rules

Bill C‑47 significantly expands the reportable transactions regime. In particular:

  • the threshold for an “avoidance transaction” is lowered so that a transaction would be considered an avoidance transaction if it can reasonably be concluded that “one of the main purposes” of entering into the transaction is to obtain a tax benefit
  • only one of the three hallmarks is required to be present for a transaction to be reportable

However, there are some relieving changes being made to the hallmarks, such as adding exceptions for:

  • scientific research and experimental development claims, in the “fee” hallmark
  • standard representations and warranties protection in the context of an arm’s length sale of a business, in the “contractual protection” hallmark
Reporting obligation

The revised reportable transactions rules will require taxpayers to file a prescribed information return within 90 days of the earlier of the day that the taxpayer (or another person who entered into the transaction for the benefit of the taxpayer):

  • becomes contractually obligated to enter into the transaction, or
  • enters into the transaction

Reporting by certain promoters and advisers involved in the transaction will also be required, within the same time limits, and, unlike the current regime, there will be no “single filer” rule.


The penalties for failure to report these transactions are significant:

  • for taxpayers, they can be up to: the greater of $100,000 and 25% of the tax benefit sought
  • for advisers or promoters, they are the total of the fees charged, plus $10,000, plus an additional amount of up to $100,000

Notifiable transactions

Bill C‑47 introduces a requirement to file a prescribed information return for a new category of specific transactions (known as “notifiable transactions'') that have been designated by the Minister of National Revenue, with the concurrence of the Minister of Finance. Taxpayers, advisers and promoters will be required to report a transaction or series of transactions that is the same as, or substantially similar to, a “designated” transaction or series of transactions. Transactions will be considered substantially similar if they are expected to obtain the same or similar types of tax consequences and are either factually similar or based on the same or similar tax strategy. The legislation specifies that this is to be interpreted broadly in favour of disclosure.

Notifiable transactions would include both transactions that the Canada Revenue Agency (CRA) has found to be abusive and those identified as transactions of interest.

While the definition of “advisor” in the notifiable transactions regime is generally the same as for the reportable transactions regime, it is broad and the fact that no fee needs to be received raises questions as to whether individual employees and partners of advisory firms could be required to separately report. However, there is a special rule which provides that the filing of an information return by an employer would also cover off the obligations of its employees. There is also a question as to whether in‑house tax staff may be considered “advisors” and are thus also required to report.

Sample notifiable transactions

In February 2022, the Department of Finance released a backgrounder2 that set out a number of sample “designated” transactions (or series of transactions), as follows:

  • manipulating Canadian‑controlled private corporation status to avoid anti‑deferral rules that apply to investment income
  • creating loss straddle transactions using a partnership
  • avoiding the 21‑year deemed disposition of trust property
  • manipulating bankruptcy status to reduce a forgiven amount relating to a commercial obligation
  • relying on purpose tests in an anti-avoidance rule relating to tax attribute trading restrictions in order to avoid a deemed acquisition of control
  • using back‑to‑back arrangements to circumvent the thin capitalization and non‑resident withholding tax rules

Reporting obligation

Reporting requirements for the notifiable transactions regime are generally the same as for the reportable transactions regime, except for the special “employer” rule described above.


The penalties for failure to report are generally the same as for the reportable transactions regime.

Uncertain tax treatments

Bill C‑47 also introduces a requirement to disclose “uncertain tax treatments.” The rules will require a corporate taxpayer that meets all of the following conditions to annually report particular uncertain tax treatments:

  • the corporation is required to file a Canadian income tax return, and has at least $50 million in assets at the end of the relevant taxation year
  • the corporation, or a group of which the corporation is a member, has audited financial statements prepared in accordance with International Financial Reporting Standards or other country‑specific generally accepted accounting principles relevant for corporations that are listed on a stock exchange outside Canada
  • there is an uncertain tax treatment related to the corporation’s Canadian income tax that is reflected in the audited financial statements of the corporation or of a group of which it is a member

An uncertain tax treatment is a tax treatment for which uncertainty is reflected in the financial statements of the corporation or of a group of which it is a member. This is generally understood to mean a tax position for which a “more likely than not” threshold of comfort has not been attained.

Reporting obligation

Reporting of all uncertain tax treatments for a taxation year would be made in one prescribed information return that is due at the same time as the reporting corporation’s Canadian income tax return.


Penalties for late‑filing an uncertain tax treatments information return are $2,000 per week per unreported item, up to a maximum of $100,000 per item.

Assessment limitation period

In addition to direct financial penalties, all three MDR regimes extend the reassessment period for any transaction, including an uncertain tax treatment, until three or four years (depending on the type of taxpayer) after all applicable reporting requirements have been complied with. In the context of the reportable and notifiable transactions regimes, this would seem to imply that a non-filing by an adviser or promoter in respect of a relevant transaction could impact the taxpayer’s tax situation, even if the taxpayer has complied.

Due diligence and solicitor-client privilege

All three MDR regimes contain “standard” due‑diligence exceptions.

For the notifiable transactions regime:

  • the standard exception applies mainly in respect of taxpayer reporting obligations
  • an additional, broader exception is provided for advisers and promoters, which is based on whether they should reasonably be expected to know if the transaction is a notifiable transaction

Solicitor‑client privilege exceptions are also provided in the reportable and notifiable transactions regimes.

Coming into force

The revised reportable transactions regime and the new notifiable transactions regime apply to transactions entered into after royal assent, which is expected to be in late June 2023. However, it would appear that an obligation to report notifiable transactions cannot arise until the targeted transactions are officially designated by the Minister of National Revenue. While sample designated transactions were released on February 4, 2022, the federal government has not indicated when it will officially designate any transactions. Depending on the content of the Minister’s designation, it may be that certain transactions that occur before the date of designation require reporting.

The new uncertain tax treatments regime applies to tax years beginning after 2022, but the specific penalties for late-filing will apply only to tax years beginning after royal assent. However, the non‑filing of an information return for tax years beginning after 2022 and before royal assent would appear to keep the assessment limitation period open indefinitely. Thus, it is recommended that taxpayers also comply for those years.

The takeaway

With royal assent of Bill C‑47 expected in June 2023, taxpayers, advisers and promoters should start complying with these new rules very soon. Unfortunately, many interpretive uncertainties remain unresolved, most particularly with respect to how the rules apply to transactions before the designation date of a notifiable transaction and the intended breadth of the “advisor” definition. The Department of Finance explanatory notes to Bill C‑47 suggest that the responsibility for any such clarifications has now been shifted to the CRA. We hope that the CRA will provide additional guidance in a timely manner.

All three MDR regimes require the filing of an information return in prescribed form. While one already exists for reportable transactions, it will presumably require modification to take into account the changes made in Bill C‑47. The notifiable transactions and uncertain tax treatments regimes will require entirely new forms.     

Quebec’s equivalents to the reportable and notifiable transactions regimes are already in force (for more information, see our Tax InsightsQuebec mandatory disclosure requirements: Deadline for reporting “specified transactions” coming soon!”). Quebec has also announced plans to adopt an uncertain tax treatments regime that is based largely on the federal regime.


1. Bill C-47, An Act to implement certain provisions of the budget tabled in Parliament on March 28, 2023 (first reading: April 20, 2023; royal assent: June 22, 2023, Statutes of Canada 2023, c. 26)
2. Department of Finance, “Income Tax Mandatory Disclosure Rules Consultation: Sample Notifiable Transactions” (February 4, 2022) at

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