Be advised that on November 24, 2023, the Supreme Court of British Columbia granted the Federation of Law Societies’ injunction suspending the application of recently expanded mandatory reporting obligations in the Income Tax Act to members of the legal profession pending the outcome of litigation challenging the constitutionality of the Income Tax Act provisions.

As reported earlier, the Federation is challenging the constitutionality of amendments to the Income Tax Act that expand existing mandatory disclosure obligations, creates a new category of notifiable transactions, and deletes a provision that relieves parties from the disclosure obligation when it had been fulfilled by another party to the transaction. The amendments came into force at the end of June 2023.

The provisions, which require taxpayers and advisors including legal counsel to report to the Canada Revenue Agency on transactions that may constitute aggressive tax planning, purported to compel legal counsel to disclose confidential and potentially privileged client information to the government, and undermine the duty of loyalty owed by members of the legal profession to their clients.

A copy of the November 24th decision is available here.