Completing Form T5001

Tax shelter

Tax shelter's name and address – Enter the name and complete address of the tax shelter entity in the left block of Section A. If the tax shelter consists of activities and there is no tax shelter entity, enter the principal promoter's name and complete address instead.

Complete address – Wherever a complete address is requested on the application Form T5001, Application for Tax Shelter Identification Number and Undertaking to Keep Books and Records, use the following codes:

• Province or territory – Use the two letter code from "Appendix A – Canadian province or territory, or U.S. state, territory, or possession codes" in the T4068, Guide for the Partnership Information Return (T5013 forms), for the name of the Canadian province or territory. For all other countries, leave this area blank.
• Postal code – Enter the Canadian postal code.
• Country – Enter "CAN" or the appropriate three-letter code from "Appendix B – Country codes" in the T4068 guide, for any other country.
• State – Use the two-letter code from "Appendix A – Canadian province or territory, or U.S. state, territory, or possession codes" in the T4068 guide, for the name of the U.S. state. For all other countries, use the two-letter code for your state or province if it has one.
• U.S. zip code – Enter the U.S. zip code. For all other countries (except Canada), use the postal code if that country has one. Otherwise, leave this area blank.

Contact person's name and telephone number – Enter the name and daytime telephone number of the person the CRA can contact if they need more information about the tax shelter. If the tax shelter consists of activities and there is no tax shelter entity, enter the principal promoter's daytime telephone number.

Principal promoter

Principal promoter's name, address, and telephone number – Enter the name, complete address, and daytime telephone number of the tax shelter's principal promoter in the right block of Section A. Follow the instructions in Complete address.

Identification number – Enter the principal promoter's identification number:

• for an individual, enter the social insurance number
• for a partnership, enter the partnership's account number or the business number (BN) for that partnership
• for a trust, enter the trust account number for that trust
• for a corporation, enter a "0" followed by the corporation's BN

If the promoter applying for the tax shelter identification number is not the principal promoter

Promoter's name, address, and identification number – If you are not the principal promoter, enter your name, complete address, telephone number, and identification number in the bottom block of Section A. Follow the instructions in section Complete address.

If there are other promoters for this tax shelter, complete Section D – Other promoter information to provide the information about the other promoters.

1. The tax shelter property is:

Tick (✔) the appropriate box, and enter the information required about that selection in the space provided:

• If the tax shelter property is an interest in a partnership, and there are more than two activities relevant to the operation of the tax shelter, enter the description that best describes the principal operation of the tax shelter.
• Enter the North American Industry Classification System (NAICS) code in the space provided. Use the appropriate NAICS code from the Industry Canada website (search "NAICS codes").
• If you tick "Other," specify the type of organization or structure in the space provided.

2. Details of tax shelter investment units:

Date to be offered for sale – Enter the date you propose to offer the tax shelter investment units for sale.

Tax shelter units and price – Enter the information for the proposed number of units, proposed price, and amount you expect to raise.

3. Is there a pre-arranged loan with this tax shelter?

Tick (✔) the appropriate box.

If you answer yes, you have to complete Section E – Financing information.

4. Designated calendar year of tax shelter sales

Enter the calendar year for which the identification number is to be valid for sales of interests in this tax shelter. A person may sell, issue, or accept consideration in respect of a tax shelter only for the calendar year designated as being applicable to the identification number.

5. Expected deductions in the first four years to the purchaser of a minimum investment unit in the tax shelter:

Code – Enter the code from the following list for the largest deduction (in dollar terms) represented as being potentially allowable to an investor in the tax shelter.

Years 1 to 4, and Total – In the space for each of the first four years, enter the dollar amount of gross deductions to the purchaser of a minimum investment unit in the tax shelter. Enter the total amount of the gross deductions in the designated space.

6. Entitlements to amounts or benefits with respect to the investment in this tax shelter:

Tick (✔) the appropriate box.

If you answer yes, you have to complete Sections F and M. For Section F – Entitlement to amounts or benefits, list the name of the entity providing the entitlement or benefit, their complete address, and indicate whether they are at arm's length with the principal promoter by ticking yes or no. For Section M – Summary of arrangements, you have to describe the nature of any amount or benefit listed, including the timing, the parties involved, and whether they deal at non-arm's length with the buyer or the promoter.

For more information about the amounts and benefits, see:

• subsection 96(2.2) for the partnership at-risk rules
• section 143.2 for the limited-recourse and tax shelter at-risk rules
• section 3100 of the Income Tax Regulations for the definition of prescribed benefit
• the Income tax folio S1-F5-C1, Related Persons and Dealing at Arm’s Length

1. Expected amount of cash payments from donors:

Enter the amount you expect to raise.

2. Expected amount of donation receipts to be issued to the purchaser of a minimum investment unit:

Code – Enter the code from the following list for the largest credit or deduction (in dollar terms) represented as being potentially allowable to a participant in the tax shelter.

Years 1 to 4, and Total – In the space for each of the first four years, enter the dollar amount of total credits or deductions potentially allowable to the purchaser of a minimum investment unit in the tax shelter. Enter the total amount of the gross deductions or credits in the designated space.

3. The property to be gifted is:

Tick (✔) the appropriate box.

4. Will the gifting arrangement involve a pre-arranged loan?

Tick (✔) the appropriate box.

If you answer yes, you have to fill out Section E – Financing information.

5. Will the gifting arrangement include a security deposit, investment, insurance policy, or other arrangement?

Tick (✔) the appropriate box.

If you answer yes, you have to fill out Section G – Security deposit, investment, and insurance policy information.

6. Was a valuation or appraisal report used to support the value used on acquisition or donation?

Tick (✔) the appropriate box.

If you answer yes, you have to fill out Section J – Valuation and appraisal information.

If you answer no, you have to fill out Section L – Outstanding items, to explain how the value of the gift will be determined.

7. How will the donor acquire the property?

Tick (✔) the appropriate box, and fill out whichever of the following sections that applies to your response:

• Section H – Trust information
• Section I – Purchase and sale information
• Section L – Outstanding items

8. Donee information:

Donee's name and identification number – Enter the donee's name and identification number for each of the organizations involved.

Name and telephone number of donee contact person – Enter the name and daytime telephone number of the person the CRA can contact for more information for each of the organizations involved.

Agreements – For each donee, tick (✔) the appropriate column under "Agreements."

If you answer yes, attach to the application a copy of any agreements entered into or being contemplated.

If you answer no, you have to fill out Section M – Summary of arrangements to describe how the recipients will be involved, and what responsibilities they will have in the arrangement. Include any documents that were presented to the recipients to explain the arrangement, or the involvement of the recipient in the arrangement.

If there is not enough space, attach a separate list using the same format as on the form.

Promoter's name, identification number, address, and telephone number – Enter the name, identification number, complete address, and daytime telephone number for each promoter of this tax shelter, including any broker being used to promote or market the product. Follow the instructions in section Complete address.

For more information about who the CRA considers to be a promoter, see Who is a promoter?

Type of promoter – Enter the code in the last column to identify the type of promoter.

If there is not enough space, attach a separate sheet using the same format as on the form.

If you enter code 2, 3, or 4 for any promoter, provide the additional information requested below.

Additional information required – Attach a separate sheet to provide the following information. If the promoter is:

• a trust, provide a list of the trustees and beneficiaries
• a corporation, provide a list of the major shareholders and employees
• a partnership, provide a list of the general partners

If you answered yes to question 3 in Section B, or to question 4 in Section C, you have to fill out Section E and provide the additional information requested below.

Lender's name and address – Enter the name and complete address of each lender for this tax shelter. Follow the instructions in section Complete address.

You have to list all the entities involved in providing financing to participants, starting with the one lending to the person acquiring the tax shelter. Include:

• the arrangement entities
• any related or non-arm's length entities
• "preferred investment dealers" (those promoted by any of the arrangement entities, or a promoter or any associated entity that will provide financing to participants)
• any series of financial arrangements flowing through other persons or entities (include a flowchart showing the flow of funds)

Arm's length with the principal promoter? – For each lender, tick (✔) the appropriate column.

If there is not enough space, attach a separate sheet using the same format as on this form.

Arm's length refers to a relationship or a transaction between persons who act in their separate interests. An arm’s length transaction is generally a transaction that reflects ordinary commercial dealings between parties acting in their separate interests.

Related persons are not considered to deal with each other at arm’s length. Related persons include individuals connected by blood relationship, marriage, common-law partnership or adoption (legal or in fact). A corporation and another person or two corporations may also be related persons.

Unrelated persons may not be dealing with each other at arm’s length at a particular time. Each case will depend upon its own facts. The following criteria will be considered to determine whether parties to a transaction are not dealing at arm’s length:

• whether there is a common mind that directs the bargaining for the parties to a transaction
• whether the parties to a transaction act in concert without separate interests; "acting in concert" means, for example, that parties act with considerable interdependence on a transaction of common interest
• whether there is de facto control of one party by the other because of, for example, advantage, authority or influence

For more information, see the Income tax folio S1-F5-C1, Related persons and dealing at arm's length.

Non arm’s length generally refers to a relationship or transaction between persons who are related to each other.

However, a non-arm’s length relationship might also exist between unrelated individuals, partnerships or corporations, depending on the circumstances. For more information, see the definition of Arm’s length.

Additional information required – Attach to the application any draft agreement, note, or similar document that will be used in respect of the loan. If all agreements are the same, send one blank copy. If agreements vary from one participant to another, send one copy of each agreement that is different. Include financing arrangements between potential investors and third parties (where such financings are to be used to promote the sale of the tax shelter, or forms part of the arrangement).

Name and address of the entity providing the entitlement or benefit – Enter the name and complete address of each entity providing an entitlement or benefit to a participant for this tax shelter. Follow the instructions in section Complete address.

You have to list any of the arrangement entities that will be supplying the investment or insurance contracts to the person acquiring the tax shelter. Include:

• the arrangement entities
• any related or non-arm's length entity
• "preferred investment dealers" (those promoted by any of the arrangement entities, or a promoter or any associated entity to provide investments or insurance to participants)
• any series of arrangements flowing through other persons or entities (include a flowchart showing the flow of funds)
• for tax shelters other than gifting arrangements, if there are investments or insurance contracts, you have to list any of the entities providing an entitlement to an amount or benefit that would have the effect of reducing in whole or in part, the impact of any loss on their investment in the tax shelter to participants. These amounts or benefits include:
  • contingent liabilities
  • guarantees
  • securities
  • indemnification agreements
  • limited-recourse amounts
  • government assistance
  • revenue guarantees
  • debt forgiveness

Arm's length with the principal promoter? – For each entity, tick (✔) the appropriate column.

Additional information required – Attach to the application any draft agreement or similar document that will be offered to the participants. If all agreements are the same, send one blank copy of the agreement. If agreements vary from one participant to another, send one copy of each agreement that is different. Include arrangements between potential participants and third parties (where such arrangements are to be used to promote the sale of the tax shelter, or forms part of the arrangement).

If you need more information about non-arm's length, see the Income tax folio S1-F5-C1, Related Persons and Dealing at Arm’s Length.

If there is not enough space, attach a separate sheet using the same format as on this form.

If you answer yes to question 5 in Section C, you have to fill out Section G and provide the additional information requested below.

Name of the entity holding the security deposit or instrument, or issuing the insurance policy – Enter the name and complete address of each entity holding a security deposit, supplying the investment, or issuing an insurance policy for this tax shelter, and provide the additional information requested below. Follow the instructions in section Complete address.

Arm's length with the principal promoter? – For each entity, tick (✔) the appropriate column.

Additional information required – Attach to the application any draft agreements or similar document that will be offered to the participants. If all agreements are the same, send one blank copy of the agreement. If agreements vary from one participant to another, send one copy of each agreement that is different. Include arrangements between potential participants and third parties (where such arrangements are to be used to promote the sale of the tax shelter or forms part of the arrangement).

For more information about non-arm's length, see the Income tax folio S1-F5-C1, Related Persons and Dealing at Arm’s Length.

If there is not enough space, attach a separate sheet using the same format as on this form.

If you answer Distribution from a trust in question 7 in Section C, you have to fill out Section H and provide the additional information requested below.

Trust's name, address, and trust account number – Enter the name and complete address, and the trust number for each trust that has a trust agreement with this tax shelter. Follow the instructions in section Complete address.

Settlors' and Trustees' name – Enter the name of all settlors and trustees of each trust that has a trust agreement with this tax shelter.

Is there an application to become a beneficiary of trust? – For each trust, tick (✔) the appropriate column. If you answer yes, attach a copy of the application to become a beneficiary of the trust. If there is no application, fill out Section M – Summary of arrangements to provide a description of how a person becomes a beneficiary and what the criteria is for accepting them.

If there is not enough space, attach a separate sheet using the same format as on this form.

If you answer Purchase in question 7 in Section C, you have to fill out Section I and provide the additional information requested below.

Vendor's name and address – Enter the vendor's name and complete address for each transaction concerning the purchase and sale of property in the tax shelter. Follow the instructions in section Complete address. Include all entities involved in the purchase and sale of the property in the tax shelter.

Description of property and cost to purchaser – Enter the description and cost to the purchaser of the property for each transaction concerning the purchase and sale of property in the tax shelter.

A transaction includes all of the factual elements relevant to the expected tax treatment of any investment, entity, plan, or arrangement, and includes any series of steps carried out as part of a plan.

Valuation or appraisal to determine cost? – For each purchase, tick (✔) the appropriate column. If you answer yes, fill out Section J – Valuation and appraisal information.

Additional information required – If the principal promoter or an entity not dealing at arm's length with the principal promoter purchased the property, provide the information on the arm's length vendors, and attach a copy of the purchase agreement. If property to be sold to the tax shelter investors is being held by arm's length vendors, provide the information on the vendors and attach a draft purchase agreement.

For more information about arm's length, see the Income tax folio S1-F5-C1, Related Persons and Dealing at Arm’s Length.

If there is not enough space, attach a separate sheet using the same format as on this form.

If you answer yes in question 6 in Section C, or to the question "Valuation or appraisal to determine cost?" in Section I, you have to fill out Section J and provide the additional information requested below.

Valuator's name and address – Enter the name and complete address for each valuator involved, or that will be involved in the arrangement. Follow the instructions in section Complete address. Include the valuators and appraisers who are expected to prepare reports if the reports have not been prepared yet.

If the arrangement is dependent on a valuation, but a valuation has not been made yet and you do not know who the valuator will be, fill out Section L – Outstanding items providing an explanation.

Number of reports – Enter the number of valuation and appraisal reports prepared by each valuator. Attach a copy of each report, or a draft if final copies are not available, to this application. Send the final copies when they become available.

If no valuations have been made yet but the valuators are known, enter "nil" in this column, and when the reports become available, send a copy to the CRA.

If there is not enough space, attach a separate sheet using the same format as on this form.

Will the following material be used to promote the sale of the tax shelter? – For each item in the list, tick (✔) the appropriate box.

If you answer yes for any item, attach all documents (or a draft if final copies are not available) to the application, and send the final copies when they become available.

If you will be making presentations to potential participants in the tax shelter arrangement in which you will be using overhead, electronic or other presentation materials, send a paper copy of the presentation with this application.

If there is not enough space, attach a separate sheet using the same format as on this form.

Fill out this section to provide an explanation why any section of this form was not completed, or why any documents the CRA requested have not been provided. For example, if when you complete:

• Section B, you entered code 99 in question 5, "Expected deductions in the first four years to the purchaser of a minimum investment unit in the tax shelter", describe the expected deduction
   
• Section C, you enter code 49 in question 2, "Expected amount of donation receipts to be issued to the purchaser of a minimum investment unit", describe the expected credit or deduction
   
• Section C, you answer no in question 6, "Was a valuation or appraisal report used to support the value used on acquisition or donation?", explain how the value of the gift will be determined
   
• Section C, you answer Other in question 7, "How will the donor acquire the property?", describe how the donor will acquire the property
   
• Section J, you know that the arrangement is dependent on a valuation, but a valuation has not been made yet and you do not know who the valuator will be, provide an explanation
   
• Section J, a valuation has not been made yet but the valuators are known, provide an explanation and send the CRA a copy when the reports become available
   
• Section M, you are unable to provide copies of each document, explain why you are unable to do so

RAAFill out this section to provide an explanation for the following situations:

• If you answered yes in question 6 in Section B, describe the nature of any amount or benefit listed, including the timing, the parties involved, and whether they deal at non-arm's length with the buyer or the promoter
• If you answered no in question 8 in Section C, describe how the recipients will be involved, and what responsibilities they will have in the arrangement. Include any documents that were presented to the recipients to explain the arrangement, or the involvement of the recipient in the arrangement
• If you answered yes to the question "Is there an application to become a beneficiary of the trust?" in Section H, but there is no application, provide a description of how a person becomes a beneficiary and what the criteria is for accepting them
• Provide a brief overview of the arrangement (1-2 pages) as described in the next section

If there is not enough space, attach a separate sheet using the same format as on this form.

Overview of the arrangement

The information in the brief overview of the arrangement must be sufficient so the CRA can comprehend the manner in which the arrangements are intended to operate. This should be a straightforward description highlighting:

• the aim of the arrangements
• the entities involved and the relationships, contractual or otherwise, between the entities
• the steps involved and the tax law, if any, which the arrangements rely on

Where complex transactions are involved, include a flowchart of the arrangements and parties involved. For example, any proposal for any promoter-preferred financing should be disclosed.

Include information explaining each "element" of the proposed arrangements from which the expected tax advantage obtained under those arrangements arises (including the way in which the arrangements are structured).

Provide references to the precise location of each item of information (for example, responses such as "see prospectus" are incomplete—you have to provide the precise annex number, page number, and paragraph or clause reference).

What is an element?

An element is "any element of the arrangements (including the way in which they are structured) from which the tax advantage expected to be obtained arises." An element includes, but is not limited to:

• a financial product
• a way of combining that financial product with other elements of the arrangements
• a way of interpreting the tax legislation in relation to the financial arrangements, that is, the tax analysis which underlies the structuring of the arrangements
• the responsibilities and duties of each person involved in the arrangement
• the benefits to be obtained
• the method for participation in the arrangement
• any agreements or proposed agreements between the arrangement entities and the applicant (or any entity associated with applicant) including loans, subcontracting arrangements, arrangements relating to the acquisition of assets and the distribution of profits arising from the arrangement

You have to provide copies of each document with the application. If you are unable to provide a document, fill out Section L – Outstanding items to explain why you are unable to do so. Where available, also provide copies of the following documents:

• management agreements
• loan agreements and other finance documentation
• marketing materials and any promotional material issued or to be issued to participants, financial planners or advisors or commission agents
• any written information to be provided to participants regarding their investment
• any other agreements or contracts including purchase agreements, rental agreements, franchise agreements
• flow chart(s) detailing the flow of funds (as amounts per participant) between the participant, promoter, financier, trustee, manager, and any other entity in receipt of the investment funds (including directors, officers, shareholders, partners and beneficiaries of these entities, as well as their residency status)
• working papers and any other materials used in setting the fees payable by a participant

If not included in the documents, describe:

• the training or expertise of the persons involved with the activity
• your plan to make the activity profitable
• the capability of the venture as capitalized to show a profit

You have to fill out the undertaking and sign it. If the promoter does not sign the undertaking, the CRA will not issue a tax shelter identification number. The promoter's (or authorized person's) signature must be an original signature for the CRA to process the application.

The CRA will issue a tax shelter identification number only when they receive all the prescribed information, and if they are satisfied with the undertaking to keep the tax shelter’s books and records.

Form T5001 must be signed and dated by the tax shelter promoter.