Requirements under controversial Canadian Bill C-377 waived relieving investment funds of potentially costly reporting requirements
The Minister of National Revenue has waived reporting requirements under Bill C-377 for periods through 2016. The new Liberal government has also indicated that it intends to repeal Bill C-377, presumably at some point in 2016.
As we previously reported, Bill C-377, a private member’s bill that is intended to mandate disclosure of union financial activities which received Royal Assent last year, raised possible concerns about disclosure requirements for investment funds. Subject to certain exceptions, this controversial bill added a provision to the Income Tax Act (Canada) which will require “labour organizations” and “labour trusts” to provide extensive disclosure regarding their financial activities to the Canada Revenue Agency. Based on a literal interpretation of the “labour trust” definition in Bill C-377, any investment fund in which a labour organization has made a financial investment could be subject to these rules. Similarly, the “labour trust” definition could also capture any investment fund in which a member of a labour organization holds an interest. While it is unlikely that the definition of labour trust (and by extension, the legislation as whole) was intended to apply so broadly, the wording of the definition makes it difficult to interpret the legislation in a more circumspect manner.
The Liberal government’s recent indications represent welcome relief for investment funds from potentially costly and onerous reporting obligations.