Section 237.5 — Income Tax Act: Definitions

The following definitions apply in this section. consolidated financial statements has the same meaning as in subsection 233.8(1). ( états financiers consolidés ) person includes a partnership. ( personne ) relevant financial statements of a corporation for a taxation year, means audited financial statements that are prepared in respect of the corporation, or a group, of which the corporation is a member, of two or more persons required to prepare consolidated financial statements for financial reporting purposes under applicable accounting principles; in accordance with International Financial Reporting Standards, or other country-specific generally accepted accounting principles (such as U.S. generally accepted accounting principles) relevant for corporations that are listed on a stock exchange outside Canada; and for a period of time that ends in the taxation year. ( états financiers de référence ) reportable uncertain tax treatment , of a corporation for a taxation year, means a tax treatment of the corporation in respect of which uncertainty is reflected in relevant financial statements of the corporation for the year. ( traitement fiscal incertain à déclarer ) reporting corporation , for a taxation year, means a corporation if the corporation has relevant financial statements for the year; the carrying value of the corporation’s assets is greater than or equal to $50 million at the end of the year; and the corporation is required to file a return of income for the year under section 150. ( société déclarante ) tax treatment , of a corporation, means a treatment in respect of a transaction, or series of transactions, that the corporation uses, or plans to use, in a return of income or an information return (or would use in a return of income or an information return if a return of income or an information return were filed) and includes the corporation’s decision not to include a particular amount in a return of income or an information return. ( traitement fiscal ) transaction has the same meaning as in subsection 245(1). ( opération ) Every reporting corporation for a taxation year that has one or more reportable uncertain tax treatments for the year must file with the Minister an information return in prescribed form and containing prescribed information in respect of each reportable uncertain tax treatment of the corporation for the year. An information return required under subsection (2) to be filed by a corporation for a taxation year must be filed with the Minister on or before the corporation’s filing-due date for the year. Notwithstanding subsections 152(4) to (5), the Minister may make any assessments, determinations and redeterminations that are necessary to give effect to subsection (5). Every corporation that fails to report a reportable uncertain tax treatment on an information return as required under subsection (2) on or before the day required under subsection (3) is liable to a penalty, for each such failure to report, equal to $2,000 multiplied by the number of weeks during which the failure continues, up to a maximum of $100,000. A corporation required to file an information return in respect of a reportable uncertain tax treatment is not liable for a penalty under subsection (5) if the corporation has exercised the degree of care, diligence and skill to prevent the failure to file that a reasonably prudent person would have exercised in comparable circumstances. The filing of an information return in respect of a reportable uncertain tax treatment as required under subsection (2) by a corporation is not an admission by the corporation that the tax treatment is not in accordance with this Act or the regulations; or any transaction is part of a series of transactions. Without restricting the generality of sections 231 to 231.3, if a corporation is required to file an information return under subsection (2) in respect of a reportable uncertain tax treatment of the corporation for a taxation year, even if a return of income has not been filed by the corporation under section 150 for the year, sections 231 to 231.3 apply, with such modifications as the circumstances require, for the purpose of permitting the Minister to verify or ascertain any information in respect of the reportable uncertain tax treatment including, for greater certainty, any information relating to any transaction, or series of transactions, to which the reportable uncertain tax treatment relates. For the purposes of the definition reporting corporation in subsection (1), the carrying value of the assets of a corporation is to be determined in accordance with paragraphs 181(3)(a) and (b).