15 August 2013 External T.I. 2013-0486061E5 - Reporting tax shelters and reportable transactions

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Whether an information return should be filed under the tax shelter rules or the reportable transaction rules.

Position: Tax shelter rules

Reasons: Paragraph 237.3(14)(a) provides that a reportable transaction does not include a transaction that is, or is part of a series of transactions that includes the acquisition of a tax shelter for which an information return has been filed under subsection 237.1(7).

XXXXXXXXXX
2013-048606

August 15, 2013

Dear XXXXXXXXXX:

Re: Reportable Transactions and Subsection 237.3(14)

This is in response to your letter of April 18, 2013, concerning the application of subsection 237.3(14) of the Income Tax Act (the "Act").

You provided a hypothetical situation where a promoter obtained a tax shelter number for a partnership in January 2013. An investor obtained an interest in the partnership later in 2013. The acquisition of the tax shelter meets the definition of a reportable transaction as defined in subsection 237.3(1). You are interested in clarification of the information return reporting requirements in this type of situation.

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Also, where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. Nonetheless, we have provided some general comments below.

Our Comments

Subsection 237.3(2) provides that an information return in prescribed form and containing prescribed information must be filed in respect of every reportable transaction by persons described therein. In this regard, form RC312, Reportable Transaction Information Return (2010 and later tax years), was released by the CRA on July 2, 2013.

Subsection 237.3(5) provides that an information return required by subsection 237.3(2) must be filed by a person for a reportable transaction on or before June 30 of the calendar year following the calendar year in which the transaction first became a reportable transaction in respect of the person.

Paragraph 237.3(14)(a) provides that a reportable transaction does not include a transaction that is, or is part of a series of transactions that includes the acquisition of a tax shelter for which an information return has been filed under subsection 237.1(7).

In the hypothetical example provided, the tax shelter number was obtained in 2013 and the tax shelter information return required under subsection 237.1(7) would be due by February 28, 2014, in accordance with subsection 237.1(7.1). In our view, the situation described in your letter would appear to fall under the tax shelter rules and an information return should be filed pursuant to subsection 237.1(7). This is consistent with subsection 237.3(14).

We trust that these comments will be of assistance.

Yours truly,

G. Moore
for Director
International Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch