September 18, 2023

The Federation of Law Societies filed a Petition in the Supreme Court of British Columbia on September 11, 2023 challenging the constitutionality of the amendments to the Income Tax Act that came into force in June 2023. The amendments expand existing mandatory disclosure obligations, create a new category of notifiable transactions, and delete a provision that relieved parties from the disclosure obligation when it had been fulfilled by another party to the transaction. While both the Federation and the Law Society of BC support the government’s efforts to address tax avoidance, it is essential that the means used do not undermine important rights and freedoms guaranteed to all citizens, particularly those that are principles of fundamental justice and guaranteed by the Charter of Rights and Freedoms.

The Federation is seeking an interim order exempting legal counsel from the application of the new mandatory reporting provisions in the Act pending the outcome of its legal challenge. A hearing on the application for an injunction has been set for October 20, 2023. In the meantime, a consent order was made on September 14, 2023 providing for an injunction suspending application of the challenged provisions of the Income Tax Act to lawyers and articled students in all provinces and territories. This injunction by consent will be in place until the earlier of the court’s decision on the injunction application or November 20, 2023.

More information about the litigation can be found on the Federation website.

Lawyers who have questions about the application of the legislation and how it might impact their practice are encouraged to discuss the matter with a tax counsel or with a practice advisor.