Canadian Tax Highlights Draft Budget Legislation Finance recently released draft legislation covering tax measures announced in the February federal budget, including third-party civil penalties. Third-party civil penalties. Post-budget consultation led Finance to reconsider the application of the proposed civil penalties to third parties. Finance's press release notes that Revenue will continue to consult with private sector professionals as it acquires experience with these new measures. It is also specified that a penalty is not levied solely because the third party relied in good faith on information provided by another person, for example, to prepare or file that person's tax return.
Explanatory notes contain specific examples of the rules' application.
Revenue indicates that it will assess such penalties only after a Head Office review. Finance has responded to comments on the December 1998 proposals regarding taxpayer migration and trusts, addressing concerns on the posting of security and possible overlap of Canadian and foreign taxes. Finance proposes that Revenue should have even broader discretion in administering the security provisions. With respect to foreign taxes, Finance acknowledges that Canadian and foreign taxation may sometimes overlap because of the proposals. Finance will pursue treaty revisions and, alternatively, will consider other measures in appropriate circumstances.