The third-party civil penalties in section 163.2 of the Income Tax Act apply to advisers and others who participate in or culpably ignore false statements that a taxpayer uses for tax purposes. There are two main branches: a planner penalty for those who make, sell, or promote arrangements, and a preparer penalty for those who help with a return knowing — or in circumstances amounting to culpable conduct — that it contains a false statement.
The penalties can be substantial and are calculated by reference to the entitlements claimed or the adviser's gross compensation. Culpable conduct is a demanding standard, similar to the threshold for the taxpayer-level gross-negligence penalty, and the Crown bears the onus of establishing it.