Tax & Trade Blog

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DIRECTOR'S LIABILITY FOR HOME BUILDERS

 CRA TARGETS CORPORATE DIRECTORS

As we have blogged about here and here, the CRA continues to assess home builders, renovators and others in the residential real estate industry on the basis that their activities may constitute a business subject to GST/HST.

A recent Tax Court of Canada (“TCC”) decision in Ayoub v. the King, 2025 TCC 48 illustrates both the complexity of these rules and the risk that corporate directors can be held personally liable for unremitted GST/HST – even when the corporation is the builder!

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CBSA COMPLIANCE VERIFICATION PRIORITIES

FOCUS ON U.S. & CHINA SURTAX ORDERS

The Canadian Border Services Agency (the “CBSA”) has released the July 2025 update to its compliance and verification priorities.  This update is part of the CBSA’s semi-annual process of resetting its verification priorities, which occurs in January and July of each year.

In this July 2025 update, the CBSA has placed a significant focus on the U.S surtaxes, alongside other ongoing compliance areas from previous rounds.  We provide a detailed breakdown of these priorities below.

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TARIFF REMISSION UPDATE

CANADA AMENDS UNITED STATES SURTAX REMISSION ORDER

With Canadian businesses still facing down the debilitating financial effects of the Canada-United States (US) trade war, the Government of Canada is attempting to provide businesses with further relief from its retaliatory tariffs.

On July 16, 2025, Canada enacted an Order in Council amending the United States Surtax Remission Order (2025) (the “Remission Order”), extending remission relief to a number of new products (adding further Schedules 2 to 5) and we report on the further opportunities for remission relief here.

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CRA MOVES TO ONLINE MAIL FOR BUSINESSES

WHAT YOU NEED TO KNOW

As of May 2025, the Canada Revenue Agency (the “CRA”) has begun implementing a significant change in how it communicates with businesses.  Online mail is now the default method for delivering most CRA correspondence through the My Business Account portal.

This transition affects both new and existing businesses and is part of the CRA’s ongoing movement towards online services – for better or for worse.  Our report on what businesses really need to know about these changes is set out below.

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CBSA INVESTIGATING CAST IRON SOIL PIPE!

DUMPING & SUBSIDIZING OF CAST IRON SOIL PIPE FROM CHINA

On July 11, 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 and subsidizing of cast iron soil pipe from China.  This investigation was prompted by a joint complaint filed by Canada Pipe Company ULC, d/b/a Bibby-Ste-Croix.

The goods under investigation are more specifically described as: 

Cast iron soil pipe originating in or exported from the People’s Republic of China, whether finished or unfinished, regardless of industry or proprietary specifications, and regardless of wall thickness, length, surface finish, end finish, or stenciling, having a nominal outside diameter from 1.5 inches to 18 inches. Cast iron soil pipe is non-malleable iron pipe of various designs and sizes, including but not limited to both hub-less and hub and spigot cast iron soil pipe (the “Subject Goods”).

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UNDERSTANDING EXPENSE DEDUCTIONS

BUSINESS OR HOBBY?

For entrepreneurs, including independent sale contractors (“ISCs”) in the Direct Selling industry, understanding the rules around business expense deductibility is essential.  This area remains a focus for the Canada Revenue Agency (the “CRA”), as highlighted in a recent Tax Court of Canada decision in Boles v. The King (2024 TCC 167) (“Boles”).  The case offers a helpful reminder of how courts determine whether an activity is a business, and whether related expenses are deductible from income.

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CITT ISSUES CONTINUATION ORDER

CONTINUING DUTIES ON THERMOELECTRIC CONTAINERS FROM CHINA

The Canadian International Trade Tribunal has issued a continuation order in respect of “thermoelectric containers from China”.  This order continues an order issued on September 5, 2019, relating to the dumping and subsidizing of thermoelectric containers originating in or exported from the People’s Republic of China (“China”).  In turn, these continuing orders go back to 2008.  Those goods are officially defined as:

Thermoelectric containers that provide cooling and/or warming with the use of a passive heat sink and a thermoelectric module, excluding liquid dispensers, originating in/or exported from the People's Republic of China.

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NO RETROACTIVE DUTIES ON PEA PROTEIN

DESPITE MASSIVE IMPORTATIONS, CITT RULES NO RETROACTIVE DUTIES

On December 4, 2024, the Canadian International Trade Tribunal (the “CITT”) announced its Finding in Inquiry NQ-2024-002, concluding that the dumping of certain pea protein from China (the “Subject Goods”) has caused injury to the domestic industry. 

While that may sound like a clear-cut finding, the CITT’s Finding held a twist: despite finding “massive importations” occurred during the investigation, the CITT determined it was unlikely to seriously undermine the remedial effect of the anti-dumping duties.  As a result, retroactive duties were not imposed.

This blog focuses on the massive importation framework under the Special Import Measures Act (the “SIMA”) and why a finding of massive importation does not always lead to retroactive duties.

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IGNORING THE CITT CAN COME AT A COST 

CONTEMPT FINDING SERVES AS A REMINDER TO IMPORTERS

In the rush of everyday business, both Canadian and foreign businesses can occasionally overlook the importance of responding to requests from the Canadian International Trade Tribunal (the “CITT” or “Tribunal”).  

A recent Expiry Review that escalated into a contempt hearing against a U.S.-based steel importer serves as a reminder of the Tribunal’s power to issue orders reaching those across the border!

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PROVISIONAL DUTIES IMPOSED ON PET RESINS

DUMPING OF POLYETHYLENE TEREPHTHALATE RESIN 2 FROM CHINA AND PAKISTAN

On June 17, the Canada Border Services Agency (“CBSA”) issued its Notice of Preliminary Determination under subsection 38(1) of the Special Import Measures Act (“SIMA”), imposing provisional duties on polyethylene terephthalate (PET) resin originating in or exported from the Peoples’s Republic of China (“China”) and the Islamic Republic of Pakistan (“Pakistan”).  The investigation was prompted by a complaint filed by Compagnie Alpek Polyester Canada.

The Subject Goods

The goods under investigation are more specifically described as:

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CBSA INVESTIGATING THERMAL PAPER

DUMPING OF THERMAL PAPER FROM CHINA

On June 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 thermal paper rolls originating in or exported from the People’s Republic of China (“China”).  This investigation was prompted by a complaint filed by three Canadian manufacturers.

The investigation continues a trend by the CBSA of scrutinizing imports from China, which continues to be the jurisdiction with highest number of Anti-Dumping and Countervailing duty orders.

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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.

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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”).

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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)

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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.

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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”?

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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

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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.

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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.

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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.