Tax & Trade Blog

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WILFUL BLINDNESS: SAME AS ACTUAL KNOWLEDGE

TO TAXPAYER'S CHAGRIN, "SHOULD HAVE KNOWN" SAME AS KNOWLEDGE

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In over 35 years of tax practice, we have had more than a few inquiries from taxpayers facing CRA Audits and Assessments maintaining that they did not actually know they were non-compliant with their tax obligations. The doctrine of “wilful blindness” is something that these taxpayers would have benefitted from understanding: that is the ability that Canada Revenue Agency (“CRA”) and the Tax Court of Canada (“TCC”) have to equate “knowledge” with “information that the taxpayer should have known but was perhaps ‘wilfully blind’ to”.

In this Tax Audit Series Report, we discuss the doctrine of “wilful blindness” and a recent TCC decision that upheld some $1.3 million in penalties and interest, on the basis that the taxpayer was wilfully blind to his tax non-compliance.

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CITT FINDING: DUMPING OF OCTG – AGAIN!

OCTG FROM MEXICO, THE PHILIPPINES, TÜRKIYE, SOUTH KOREA & USA

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On April 21, 2026, the Canadian International Trade Tribunal (the “CITT”) announced its Finding in Inquiry NQ-2025-007 (the “Finding”) reporting that the dumping of Oil Country Tubular Goods (“OCTG”) originating in or exported from the United Mexican States, Republic of the Philippines, and originating in the following countries (the “Subject Goods”):

• the Republic of Türkiye (by or on behalf of Borusan Mannesmann Boru Sanayi ve Ticaret A.Ş.);
• the Republic of Korea (by or on behalf of Hyundai Steel Company); and
• the United States of America (by or on behalf of Tenaris S.A).

New Anti-Dumping Duties (“ADDs”) now apply to the Subject Goods imported into Canada and released after April 21, 2026.

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EMPLOYER HEALTH TAX: RELATED PARTY RULES

INCOME TAX RULES REIGN, BUT AS INTERPRETED BY ONTARIO?

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Ontario’s Employer Health Tax Act (the “Act” and the “EHT”) regime contains important associated-employer and related-party rules impacting things like EHT Exemptions and the calculation of payroll thresholds, as well as ultimate EHT liability. While the rules borrow heavily from Income Tax Act (“ITA”) definitions and concepts, the application of the rules in the EHT context is not always straight-forward and often influenced by administrative interpretation.

In this Indirect Tax Report, we review the EHT associated-employer variation of these rules and highlight practical difficulties arising when income tax concepts are applied for provincial purposes.

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TAX OBJECTIONS: WHAT HAPPENS NEXT?

APPEALS PROCESS MOVES SLOWLY UNTIL SUDDEN ACTION IS REQUIRED

As we have reported on, Canada Revenue Agency (“CRA”) and other government authorities appear to be ramping up their tax audit activity. While taxpayers have statutory rights to appeal assessments they view as incorrect by filing a Notice of Objection, what happens after filing those documents can be unclear.

Appeals processes initially move slowly and can feel a bit like a “black box”. Government officials are generally not forthcoming with updates, and it is not uncommon for taxpayers to hear nothing for months – or even years! However, when the appeal does advance, the timelines for action can suddenly become very short.

A failure to respond in time can result in an objection being denied, or the permanent loss of one’s further appeal rights.

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CRA INFORMATION REQUESTS - SHOPIFY 2

FEDERAL COURT DISMISSES CRA UNNAMED PERSON REQUIREMENT IN SHOPIFY 2

Among the most important decisions for GST/HST practitioners in 2025 were two Federal Court rulings dismissing applications by the Canada Revenue Agency (“CRA”) for unnamed persons requirements (“UPRs”) – a type of information demand in respect of an ascertainable group of unnamed persons that requires Court authorization – directed to Shopify Inc. (“Shopify”).

Below, we review the second of these two Federal Court decisions involving Shopify (Canada v. Shopify Inc., 2025 FC 969 – “Shopify 2”), in which the CRA failed to satisfy the requirement that the target group under its UPR be “ascertainable”.

For our review of the first Shopify decision, click here.

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CRA INFORMATION REQUESTS - SHOPIFY 1

FEDERAL COURT DISMISSES CRA UNNAMED PERSON REQUIREMENT IN SHOPIFY 1

Among the most important decisions for GST/HST practitioners in 2025 were two Federal Court rulings dismissing applications by the Canada Revenue Agency (“CRA”) for unnamed persons requirements (“UPRs”) – a type of information demand in respect of an ascertainable group of unnamed persons that requires Court authorization – directed to Shopify Inc. (“Shopify”).

Below, we review the first of these two Federal Court decisions (Canada v. Shopify Inc., 2025 FC 968 – “Shopify 1”), in which the CRA’s UPR was found not to have the required purpose of verifying compliance with a duty or obligation under Canadian tax law.

For our review of the second Shopify decision, click here.

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OECD ADAPTS TO REMOTE WORK ECONOMY

HOME OFFICES AS POTENTIAL PERMANENT ESTABLISHMENTS IN REMOTE WORK ERA

On November 19, 2025, the Organization for Economic Co-operation and Development (“OECD”) released an update to the OECD Model Tax Convention on Income and on Capital (the “2025 Update”).

Among the changes are important clarifications to the Commentary on Article 5, dealing with the meaning of Permanent Establishment (“PE”) – and more specifically directed at helping determine when an individual’s home office may constitute a PE of the enterprise engaging the worker.

In a world increasingly shaped by remote work, changes like these are timely and likely only the beginning of further developments – and tax audits!

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GROWING GST RISK FOR COMMERCIAL BUILDERS?

PRESSURE TO GRANT GST REBATES NOW A HARBINGER OF AUDIT ISSUES TO COME

A good friend who’s a lawyer in the thick of things in the commercial building space recently prognosticated that with all of the pressure on Commercial Builders to close new home and (particularly) condo deals, they have been granting GST/HST New Housing Rebate credits that may not ultimately pass muster.

We review the latent liability risk that may be facing Commercial Builders below.

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AUTOMOTIVE REPORT: TARIFF CHAPTER 87

CBSA'S VERIFICATION AUDITS TARGET VEHICLE TIRES

For many in the automotive industry, there is a temptation to import foreign-made goods (i.e., non-USMCA-qualifying) for use in production processes or as parts and sub-components for vehicles and automotive systems. They are often less costly.

At the same time, many of these imports attract significantly higher duty rates, which can create pressures to classify them under potentially alternative tariff headings with lower rates of duty.

Our recent file experience has demonstrated that this is often a short-lived strategy, as the CBSA’s verification procedures will eventually put these classification decisions to the ultimate test.

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MOVING ASSETS IN TAX DISPUTE? THINK AGAIN!

WHY TRANSFERRING ASSETS CAN MAKE A BAD SITUATION WORSE

When a taxpayer is assessed by the Canada Revenue Agency (“CRA”), the instinct to “do something” can be overwhelming. One of the most common reactions is to start moving assets to related parties – for example to spouses or children – in the hopes of keeping them out of the CRA’s reach while the tax dispute plays out.

A recent Tax Court of Canada ("TCC") decision shows why this instinct is a bad idea, and is a lesson for anyone trying to sidestep tax problems: what one does after the fact can often make things worse for all involved!

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CRA HOME "BUILDER" AUDITS USING MLS DATA!

THIRD-PARTY RESOURCES TAKING CRA AUDITS TO THE NEXT LEVEL

As we have previously written here, the Canada Revenue Agency (“CRA”) has significantly expanded its audit activity in the residential real estate sector – particularly targeting homeowners and renovators as “builders” for GST/HST purposes, triggering tax on the sale of homes following substantial renovation (and parallel income tax exposure).   In another troubling trend, CRA is now using third-party sources like MLS Listings to rebut taxpayer positions that these homes were intended as personal residences – often to great surprise and disappointment of the "builders".

Real Estate Audits & Use of Third-Party Sources

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ENABLERS TARGETED BY CRA & CBSA ALIKE

RECENT ACTION ON CAR THEFTS EASILY TRANSLATES TO TAX & CUSTOMS MATTERS

Recent news reports about Project Chickadee – the OPP and CBSA joint project aimed at dismantling organized car theft rings exporting stolen Canadian vehicles overseas – focused on an effort to target not only the direct causes of these thefts (the gangs stealing the vehicles), but also the ENABLER:  freight forwarding companies, shipping companies, and other intermediaries effectively aiding and abetting the process.

The Canadian government’s ability to intervene in situations that it does not ultimately like (i.e., tax schemes, GST shams, tariff fraud) knows no bounds.   And the government’s response does not always require joint work with the OPP or RCMP, but can come in much more innocuous ways. 

In this report, we examine a couple of ways in which Canada Revenue Agency (“CRA”) and Canada Border Services Agency (“CBSA”) can target persons indirectly associated with GST or customs non-compliance.

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FUEL VENDOR REGISTRATIONS IN CANADA

OVERVIEW OF FUEL TAXES & REQUIRED REGISTRATIONS

Canada’s fuel tax and registration landscape involves a patchwork of federal and provincial laws. Depending on the nature of their activities, both resident and non-resident oil and gas companies operating in Canada face many layers of compliance obligations.

This blog provides a high-level overview of the kinds of registrations or licenses that may be required for those selling or distributing fuel in Canada.

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CRA AUDITS PURPOSE-BUILT HOUSING REBATE

CRA REBATE ADMINISTRATION LEADS TO MANY DENIALS

When Prime Minister Justin Trudeau’s Liberal government announced its new 100% GST rebate for tax paid on the construction of qualifying new rental housing in September 2023 (which we blogged on here), the measure – formally called the Enhanced GST New Rental Housing Rebate – was unveiled with considerable fanfare.  In fact, it was touted as a key pillar of Canada’s renewed national housing strategy, and designed to reduce development costs, accelerate construction of much-needed rental units and increase long-term affordability for renters across Canada.

That fanfare has now met the practical reality of tax auditors at CRA charged with reviewing and auditing these Rebate Applications.   In fact, CRA is now actively auditing in this area and rejecting a number of Rebate Applications for failing to meet the very complicated rules that came with the new Rebate process.

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CRA DIRECTS TAXPAYER TO WRONG COURT!

PROPER JURISDICTION REQUIRED AT OUTSET OF ALL TAX DISPUTES

The question of jurisdiction (that is, which Court has the authority to hear a particular dispute) remains often confused in the administration of Canadian tax law.  While the Canada Revenue Agency (“CRA”) routinely provides directions in its decision letters about where taxpayers can appeal, a recent Tax Court of Canada (“TCC”) decision demonstrates that the CRA sometimes gets this wrong – with serious consequences for taxpayers!

More problematically, a similar scenario may now be unfolding with the Canada Border Services Agency’s (“CBSA”) appeal process for remission applications made in respect of Canada’s recent retaliatory tariffs imposed on US goods.

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ONTARIO FUEL TAXES: A MINEFIELD!

HIDDEN PITFALLS FOR FUEL DISTRIBUTORS IN CANADA

Companies in the business of importing or dealing in fuels in Canada quickly learn that the required registrations can be a maze of red tape.  Each province has its own playbook, and for Ontario in particular, the rules can be uniquely complicated.

What businesses need to know is that going at it alone comes with risks.

Some of the licensing statutes are downright antiquated and taking steps that may seem compliant can still open the door to other major exposures. 

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NEW GST VOLUNTARY DISCLOSURE GUIDELINES!

UPDATED CRA VD PROGRAM GUIDELINES NOW IN EFFECT

On September 9, 2025, the Canada Revenue Agency (“CRA”) released GST/HST Memorandum 16-5-1 introducing major changes to its Voluntary Disclosure Program (“VDP”) in GST/HST matters (the “GST/HST VDP”), alongside IC00-1R7 – Voluntary Disclosure Programwhich outlines equally meaningful revisions to the income tax VDP.

This is the first update to the VDP since 2018 (which we wrote about back then here), and the changes appear aimed at encouraging more taxpayers to come forward and correct errors or omissions in their tax affairs (perhaps a result of less than anticipated take-up of the VDP program in recent years).  The new rules took effect Oct 1, 2025.

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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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AUTOMOTIVE REPORT: TARIFF HEADING 9966

CBSA'S VERIFICATION AUDITS TARGET RESTORATION INDUSTRY

A good part of our Tax and Trade practice involves advising Clients in the Automotive Industry on matters involving the application of Canadian taxation and customs duties to motor vehicles and parts.

Recently, we have seen an increase in audits and assessment of automotive restoration businesses, which seem to be currently targeted by the Canada Border Services Agency (“CBSA”).

One focal point seems to be the application of Tariff Concessionary Item 9966.00.00 (“Concessionary Code 9966”), which allows for the duty-free importation of certain vintage vehicles and repair parts.

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STAFFING AGENCIES CAUGHT BY EHT!

EMPLOYER HEALTH TAX: THE SMALL TAX WITH THE BIG PUNCH!

As discussed here, our recent file experience demonstrates that provincial governments, like Ontario's Ministry of Finance (“MOF”), are ramping up audits for Employer Health Tax (“EHT”) liability.

One area of recent audit activity has been on Staffing Agencies, temporary employment and similar entities that procure workers for many Canadian and US businesses, contracting them out as effective out-sourced employees.

In an almost counter-intuitive result, recent assessments appear to be targeting Staffing Agencies for EHT due on remuneration paid to remote workers residing outside of the taxing province! (Think of an Ontario Staffing Agency assessed on the wages paid to remote workers residing in BC, with ABSOLUTELY NO connection to Ontario's or its health care services!)