The Canada Customs and Revenue Agency has finalized its guidelines for third-party civil penalty provisions.

In January 2001, the CCRA released draft guidelines to elicit comments from stakeholders. It received many submissions, and as a result made several changes to the draft guidelines. The agency has now finalized the guidelines and made them available on its Web site.

The third-party civil penalty provisions apply to statements made after June 29, 2000. Examples of statements include information provided on: tax returns, tax credit forms, invoices, donation receipts, financial statements and prospectuses.

The penalties may apply to any false statement made after this date. There is no statutory limitation regarding the time period during which an assessment of these penalties has to be issued, although the CCRA says that in practice it does not foresee the penalty being applied in a period that is beyond the legislated record retention period of six years.

For example, the “planner penalty”, provides for a penalty on a person who causes another person to make a false statement. This could apply to tax shelter promoters holding seminars or presentations to provide information in respect of a specific tax shelter; and appraisers and valuators preparing a report for a proposed scheme/shelter.

The basic penalty is $1,000. However, when a false statement is made in the course of a planning activity or a valuation activity, the penalty amount is the greater of $1,000 and the total of the person’s payment for the activity.

The “preparer penalty”, provides for a penalty on a person who actually makes a false statement, including a person preparing a tax return for a specific taxpayer; a person providing tax advice to a specific taxpayer; and an appraiser preparing a report for a specific taxpayer.