Tax & Trade Blog

The Government of Ontario has now made a long-hoped for change to the Ontario Business Corporations Act (“OBCA”) removing the director residency requirement effective July 5, 2021.

This means that corporations incorporated or continued into Ontario no longer need to have any Canadian resident directors and will help put Ontario on a level playing field with provinces like British Columbia which have been without a director residency requirement for nearly two decades!

Quebec has special rules regarding the mandatory disclosure of “nominee agreements” (which are essentially the Quebec civil law equivalent of undisclosed agency agreements) where the agreement is made as part of a transaction or series of transactions that have “tax consequences”.

We previously blogged about a Tax Court of Canada (TCC) case on the tax status of credit card/payment processing services provided by Visa. In that case, the TCC held that Visa’s services constituted the supply of “administrative services” and were therefore excluded from the definition of a “financial service” in subsection 123(1) of the Excise Tax Act (ETA).

The Federal Court of Appeal (FCA) has now reversed the TCC decision, holding that Visa’s services were in fact exempt financial services.

The determination of whether a transaction is a ‘sham’ has been a longstanding issue in tax law, but one that has seemingly been the focus of a number of CRA projects across a number of different industries, including a current project in the international long-distance minutes business, where the CRA says that businesses are involved in the so-called carousel sham!

On Monday, November 30, 2020, the Government of Canada delivered its Fall Economic Update, entitled Supporting Canadians and Fighting COVID-19. As reported in the National Post, the Update will be particularly noteworthy for online businesses selling goods/services to Canadians, as it announced that the government would soon “force foreign digital vendors like Netflix and Amazon to collect sales taxes on a bevy of products and services sold to Canadians”.

The tax measures cover a variety of online services, from streaming platforms to short-term rental accommodations, and are expected to be in effect Canada-wide for GST/HST purposes by July 21, 2021.