Tax & Trade Blog

---

CANADIAN EXPORT CONTROLS

MORE ENFORCEMENT COMING ON CANADIAN EXPORT SANCTIONS?

Canada, like many of its trading partners has a significant framework of export sanctions, targeting the controlled export of goods and technology to sensitive destinations, governments, and foreign actors worldwide.  Yet, for the duration of my International Law practice to date — some 35+ years — the unspoken joke has been that Canada’s enforcement actions were almost nonexistent, at least relative to the situation in the US.  (Indeed, one needs to look far and wide for caselaw regarding Canadian export controls enforcement).

With the recent trade wars and President Trump‘s desire to strengthen borders, this appears to have changed.  We review a recent Canadian arrest for sanctions evasion below, which may be a harbinger of greater action to come despite the rarity of such cases.

---

CUSTOMS NON-COMPLIANCE NEVER PAYS!

HIGH DUTIES AND TARIFFS MAKE NON-COMPLIANCE A TEMPTING TRAP

Given the high tariff rates importers are facing due to Canada’s retaliatory tariffs (actually surtaxes), importers may be tempted to consider various methods to try and minimize the duty paid.  Unfortunately, most of these methods could be considered “evasion” – and there is no shortage of unscrupulous people hawking them.  On balance, these strategies are a poor choice given the potentially serious consequences for violating customs laws. 

As an example, the European Public Prosecutor’s Office (the “EPPO”) recently dealt with a customs evasion scheme in Italy involving Chinese electric bicycles (“e-bikes”).

---

GST 101: RESIDENT VS. NON-RESIDENT

GST REGISTRATION DEPENDS ON RESIDENCY

This is the second in our series of "GST 101 Reports", written with a view to educating our readers on the basics of Canada's GST/HST system, and building towards more in-depth discussions to come.

This Report deals with the concept of "Residency" which is a bedrock issue when determining whether businesses are required to be registered for Canada's GST/HST System.

Why is Residency Relevant?  (Special Non-Resident Rule)

---

TARIFF REMISSION CLAIMS

A RECOMMENDED OPTION FOR BUSINESSES SEEKING TARIFF RELIEF

With the Canada-United States trade dispute enduring, Canada’s retaliatory tariffs are unlikely to be lifted soon.  Many businesses that considered their strategic options have now concluded Remission Claims are the only viable option to deal with Canada’s retaliatory tariffs.  In this Report, we review the Remissions Process, and why retaining Experienced Trade Counsel is a good idea at this early stage.

---

GST 101: GST REGISTRATION RULES

CANADA'S BROAD REGISTRATION RULES FOR ITS GST/HST SYSTEM

This is the first in our series of "GST 101 Reports", written with a view to educating our readers on the basics of Canada's GST/HST system, and building towards more in-depth discussions to come.

This Report Deals with Canada's extremely broad GST/HST Registration Requirements.

What is Canada's “GST/HST”?

---

WHEN DO I NEED A TAX OR TRADE LAWYER?

RETAINING A LAWYER AT AUDIT OR ASSESSMENT A WISE DECISION!

In my 35+ years of experience, I have seen the tax world evolve quite a bit.  It used to be that tax or trade lawyers were engaged very early on in most disputes.  Usually at the time of audit.  Overtime, we have seen clients try different approaches, from beginning to use non-lawyer accountants or customs brokers for dispute resolution, to (most recently) relying on AI to fight the dispute for them.

Four Reasons to Retain Experienced Counsel Early

---

CANADIAN T4A REPORING REQUIREMENTS

COMPLICATED FOR DIRECT SELLERS & DEPENDENT ON DISTRIBUTION MODELS

Canadian direct selling companies (the “Company”) typically operate using one of two different distribution models.

In the “classic model”, independent sales contractors (“ISCs”) would be expected to purchase goods from the Company and resell them to consumers or other ISCs, with the ISCs earning a mark-up on the difference between their purchase and selling prices.  In the more modern variation of direct selling distribution, the Company would be expected to sell directly to consumers but compensate their ISCs for acting as either sales agents or sales representatives, based on their parts in putting the sales transaction together.

---

CANADA OPENS 2025 DAIRY QUOTA APPLICATIONS

APPLICATION PERIOD RUNS UNTIL JUNE 15, 2025

Global Affairs Canada (“GAC”) recently announced the opening of the tariff-rate quota (“TRQ”) application period for the 2025-2026 dairy year, which is open from May 1 to June 15, 2025.  There are no changes to the existing ministerial allocation policies from the previous year, though this will be the second year Canada applies its new CPTPP dairy TRQ policies we have previously written about here.

---

CBSA INVESTIGATING STEEL STRAPPING

DUMPING OF STEEL STRAPPING FROM CHINA, KOREA, TÜRKIYE & VIETNAM

On May 12, 2025, the Canada Border Services Agency (“CBSA”) issued a Notice of Initiation of Investigation under the Special Import Measures Act (“SIMA”) in respect of the alleged dumping of certain steel strapping originating in or exported from China, Korea, Türkiye and Vietnam.  This investigation was prompted by a complaint filed by JEM Strapping Systems Inc., a manufacturer located in Ontario.

This investigation continues a broader trend of increased scrutiny on foreign steel products.  Just last month, the CBSA and the Canadian International Trade Tribunal (the “CITT”) launched investigations into potential dumping of steel wire, which we wrote about here.

---

SIMA EXPIRY REVIEW ORDER:

SILICON METAL ORIGINATING IN OR EXPORTED FROM CHINA

On April 30, 2025, the Canadian International Trade Tribunal (the “CITT”) announced an Order in Expiry Review RR-2024-002 (the “Order”), continuing its finding of material injury in respect of the dumping of Silicon Metal originating in or exported from the People’s Republic of China (the “Subject Goods”). 

The Subject Goods

The Subject Goods are defined as:

---

ITC ENTITLEMENT ON FINANCIAL SERVICES

THIRD TIME'S THE CHARM FOR NORTHBRIDGE?

Every so often, decisions from the Tax Court of Canada (the “TCC”) and the Federal Court of Appeal (the “FCA”) highlight the intricacies of the GST/HST regime – particularly for financial institutions.  The recent decision in Northbridge Commercial Insurance Corporation v. The King (2025 FCA 83) is a prime example.  The FCA has now referred the case back to the TCC for a third hearing, highlighting the complexity of input tax credit (“ITC”) entitlements related to insurance supplies.

---

INVESTIGATION OF RENEWABLE DIESEL ENDS

CITT CONCLUDES NO REASONABLE INDICATION OR THREAT OF INJURY

While we have written about a number of anti-dumping and subsidy investigations by the Canada Border Services Agency (“CBSA”) where Anti-Dumping Duties and/or Countervailing Duties (ADD/CVD) have been imposed, infrequently such investigations can also terminate without the imposition of any ADD/CVD. 

The recent decision by the Canada International Trade Tribunal (“CITT”) into the alleged dumping and subsidizing of Renewable Diesel originating or exported from the United States serves as a timely example of such a termination.

---

CLOUD SERVICES & PROVINCIAL SALES TAX

A CLEARER FORECAST IN MANITOBA & WESTERN CANADA

It only got a single line in Manitoba’s 2025 budget - unlike housing measures that came with charts and headlines - but the new provincial sales tax on cloud services could bring just as much fiscal weight.  As part of its 2025 budget, Manitoba announced it will apply its 7% Provincial Sales Tax (“PST”) to Software as a Service (“SaaS”), Platform as a Service (“PaaS”), and Infrastructure as a Service (“IaaS”), starting January 1, 2026. 

Manitoba is the latest to adopt this trend, following BC (which we wrote about here) and Saskatchewan*. The message across Western Canada is clear: cloud services are in the “net tax”!

---

PRESIDENT TRUMP RELIEVES AUTO TARIFFS

NAVIGATING THROUGH TARIFF TROUBLE

On April 29^th 2025, President Trump suspended the operation of automotive tariffs and provided other relief in the form of an import adjustment offset (see Proclamation here).  Those original automotive tariffs were announced on March 26 2025 (see Proclamation here).  In that original proclamation, the President imposed a 25% tariff on automobiles set to begin on April 3^rd.  He further announced a 25% tariff on automobile parts to begin no later than May 3^rd.  These automotive tariffs included articles made of steel and/or aluminum.  The President then issued a further proclamation which modified the March 26 2025 tariffs. 

---

RETALIATORY TARIFF RELIEF IMPLEMENTED

REMISSION AVAILABLE FOR SURTAXES IMPOSED ON US GOODS

We had previously written that the Government of Canada (“Canada”) was planning to provide a remission process for its retaliatory tariffs here. 

On April 16, 2025, Canada implemented the United States Surtax Remission Order (2025) (the “Order”), providing an avenue for much needed relief from its three rounds of retaliatory tariffs.  Importers seeking to mitigate the effects of Canada’s retaliatory tariffs should seek legal advice from international trade counsel to determine their eligibility and assist with remission applications.

---

USMCA ORIGIN: ANALYTICAL RULES

PLANNING FOR TRUMP TARIFFS

While President Trump has instituted a pause on his tariffs implemented through executive orders on March 6 and April 2, 2025, many Canadian businesses may be unaware that this reprieve  only extends to Canadian exports that qualify for preferential treatment under the United States Mexico Canada Agreement (“USMCA”). 

Accordingly, Canadian businesses need to place a premium on understanding and properly applying USMCA origin status.

This is the first of a two-part series on how one can claim USMCA preferential tariff treatment and focuses on the substantive origin analysis, following which the “formal” certification requirements must be met.

---

CBSA INVESTIGATING CERTAIN STEEL WIRE

DUMPING OF CERTAIN CARBON AND ALLOY STEEL WIRE

• Reading from Vietnam and want a Vietnamese version? / Đọc bài viết bằng tiếng Việt tại đây

On April 22, 2025, the Canada Border Services Agency (“CBSA”) issued a Notice of Initiation of Investigation under the Special Import Measures Act (“SIMA”) in respect of the alleged dumping of certain carbon and alloy steel wire originating in or exported from China, Taiwan, India, Italy, Malaysia, Portugal, Spain, Thailand, Turkiye and Vietnam.  This investigation was prompted by a joint complaint filed by two manufacturers headquartered in Quebec. 

The goods under investigation are more specifically described as: 

Carbon or alloy steel wire, of round or other solid cross section, in nominal sizes up to and including 24.13 mm (0.950 inches) in diameter, whether or not coated or plated with zinc, zinc-aluminum alloy, or any other coating, including other base metals or polyvinyl chloride or other plastics (the “Subject Goods”).

---

USMCA ORIGIN: CERTIFICATION RULES

PLANNING FOR TRUMP TARIFFS

While US President Trump has instituted a pause on his tariffs implemented through executives orders on March 6 and April 2, 2025, many Canadian businesses may be unaware that this reprieve only extends to Canadian exports that qualify for preferential tariff treatment under the United States Mexico Canada Agreement (“USMCA”).  Accordingly, Canadian businesses need to place a premium on USMCA origin status. 

This is the second of a two-part series on how one can claim USMCA preferential tariff treatment and focusses on the "formal" requirements for doing so, once the substantive origin analysis has been completed.

---

CBSA PRELIMINARY FACTS: NO CIRCUMVENTION!

PRELIMINARY ASSESSMENT ON CONTAINER CHASSIS FROM VIETNAM

On April 9, 2025, the Canada Border Services Agency (“CBSA”) released a Statement of Essential Facts (“SEF”) related to its first-ever anti-circumvention investigation with respect to whether container chassis originating from Vietnam are circumventing Canada’s trade remedy measures on container chassis from China. 

This post provides an overview of the SEF and the CBSA’s Preliminary Assessment (see our earlier blog for the background on this).

---

DUTY DRAWBACK UPDATE

DUTY DRAWBACK AN IMPORTANT OPTION IN CURRENT TRADE WAR

Since we last wrote about duty drawback, there have been significant developments in the trade war between Canada and the United States (“US”).  Canada has enacted three rounds of retaliatory tariffs, while the US has also imposed a number of different tariffs, with the most recent being President Trump’s reciprocal tariffs.

Amid this escalating trade war with no end in sight, businesses should consider duty drawback as a mechanism to mitigate the impact of tariffs and obtain legal advice to determine eligibility.