News release

CCRA issues Third-party penalties guidelines

Ottawa, October 2, 2001... The Canada Customs and Revenue Agency (CCRA) today announced that the Information Circular 01-1 Third-Party Civil Penalties is on its Web site. The circular governs how the CCRA can take action against individuals who counsel others to file tax returns based on false or misleading information, or who turn a blind eye to false information provided by their clients for tax purposes.

In January, 2001, the CCRA released draft guidelines on third-party penalties for public comments. All comments and submissions were carefully considered and assisted in finalizing the circular. The new information circular contains guidelines and processes for applying the third-party civil penalties described in section 163.2 of the Income Tax Act and in section 285.1 of the Excise Tax Act.

Until the third-party civil penalties came into force on June 29, 2000 following the passage of amendments to the Income Tax Act, no civil penalty existed to deter false and misleading third-party advice - only taxpayers who acted on false and misleading advice could be penalized. The civil penalties associated with the guidelines issued today address non-compliance and will deter third parties from making false statements or omissions about income tax or GST/HST matters.

The Canadian tax system is based on self-assessment and is governed by legislation that encourages compliance and penalizes taxpayers who provide false or misleading information about tax matters.

In order to maintain the integrity of the tax system, CCRA is committed to applying the penalties fairly, consistently, and only when clearly justified.

For more details on the Information Circular 01-1, Third-Party Civil Penalties, please refer to: http://www.ccra-adrc.gc.ca/formspubs/technical/penalties-e.html

42T/01