Tax & Trade Blog

An oft-overlooked component of Canada’s Excise Tax Act (“ETA”) involves the special registration rules which apply to taxi businesses – in place well before the advent of ride-sharing services like Uber and Lyft.

CRA has recently updated its administrative policies on these registration rules to reflect changes made to the ETA on this issue back in 2017!  The new changes update CRA’s published position to incorporate commercial ride-sharing services within the definition of taxi business and is indicative of the risk in relying on such positions which could be out of date and offside current law.

Direct sellers in the United States could soon faceupdated rules which would ban businesses from relying on non-competition clauses in worker contracts. This parallels recent moves in certain Canadian provinces to further restrict same and is a perfect opportunity for direct sellers in Canada to review their own non-competition clauses in anticipation of potential changes.

As we blogged about here and here, CRA has recently focused its audit powers to investigate allegations of shams (i.e., fraud) in the application of GST in the telecommunications industry.

The alleged fraudulent activities come in many forms and can even involve allegations of so-called GST ‘carousel schemes’. Below, we highlight two cases currently working their way through courts and the takeaway points for businesses unlucky enough to be facing similar situations.

Tax professionals are well aware of how critical it is to file Notices of Objection on time — generally within 90 days of the mailing of a Notice of Assessment. For professionals and taxpayers who find themselves unable to have met this deadline, section 303 of the Excise Tax Act (the “ETA”) (and section 166.1 of the Income Tax Act) provides some potential relief (i.e., an extension to file, provided certain preconditions are met).

A recent Tax Court of Canada (“TCC”) decision in Lamarnic & J Ltd. v. The Queen (2022 TCC 35) explores this rule but, at the same time, serves as a cautionary tale for taxpayers and tax professionals alike that these extension rules may only be available if the rules are strictly adhered to within set statutory timelines.

An often-misunderstood aspect of the liquor industry by aspiring brewmasters and restauranteurs is the sheer number of regulatory steps required to import, manufacturer, distribute, and/or sell alcohol in Canada.  Complicating matters is the fact each province may have its own separate rules and licensing regimes.

This blog explores the various provincial licenses required to start an Ontario liquor business.

Canada Border Services Agency (“CBSA”) resets it “audit priority areas” twice a year. This sees CBSA designate certain tariff classification codes as priority areas for custom verifications (i.e., ‘audits’), based on the CBSA’s belief that those goods pose significant risks for non-compliance in terms of proper tariff classification, valuation, and country of origin.

CBSA has now released its July 2022 Trade Compliance Verifications, announcing a new priority area, as well as providing updates on a number of ongoing projects, which we have summarized below.

As we have blogged about several times in the past, homebuilders are frequently in the gunsights of CRA in hopes of capturing potentially unremitted GST/HST on sales made the course of their commercial activity.

A less-explored issue is how CRA sometimes casts too wide a net, and mistakenly assesses unlucky individuals who are not builders, but whose facts may suggest otherwise. The recent case in Wang v. The Queen, 2021 TCC 86 (CanLII) deals with this issue and serves as a cautionary tale for individuals in the unfortunate position of staring down a CRA assessment on the unplanned sale of their new home.

Further to our recent blog which outlined Canada’s recent economic sanctions against Russia, Prime Minister Justin Trudeau has announcedfurther new sanctions in light of Russia’s invasion of Ukraine — mirroring those taken by other members of the international community.

The new measures target additional individuals and institutions to prohibit Canadians from dealing with same, as well as impose a blanket ban on engaging in any transactions with the Russian Central Bank.

On February 22, 2022, Prime Minister Justin Trudeau announced new sanctions on Russia in response to Russia’s escalation of the conflict in Ukraine — lock-step with the positions taken by other Western world leaders.

More sanctions against Russia and particular members of its government are also expected to follow in light of last evening’s commencement of the Russian war in Ukraine, again in concert with other members of the international community.

With home prices across Canada skyrocketing (some say on account of a combination on and off-shore buyer speculation as well as a pandemic-induced exodus from major cities), various federal, provincial and municipal governments have been kicking the tires on new vacancy tax policies patterned off of Vancouver’s 2017 politically popular (and revenue generating) measures.

Canadian homeowners and first-time investors will need to brace themselves for the roll-out of these taxes across the country, as it seems that — like the “carbon tax” — these measures are almost sure to come on a broad-based level.

The FCA has ruled against the Bank of Montreal (“BMO”) (2021 FCA 189) in its challenge of the Minister’s decision to deny BMO’s input tax credit (“ITC”) allocation methodology under section 141.02(18) of the Excise Tax Act. This will likely be bad news for certain institutions that elect to use their own methods for allocating ITCs within complex corporate groups.

One of the least understood areas of CBSA administrative policy are the rules surrounding the operation and licensing of customs warehouses. These warehouses (of which there are several types) allow goods brought into Canada to be stored within the country while deferring the payment of applicable duties and taxes in respect of their import until they are ‘released’. The rules in this area are administratively complex, and expert legal advice should be considered for any business looking to use or operate a customs warehouse.

As with have blogged about many times in the past (see here, here, here, and here), one of the most misunderstood areas of the law around corporate directors is the concept of director’s liability for the corporation’s unremitted tax.

Several recent cases in our practice have reminded us of the critical importance of these rules and how all directors can benefit from a refresher of their basic structure.

On June 4, 2021, the Government of Canada published an Order Amending the Export Control List (the “Order”), changing the regulatory landscape for businesses that deal with controlled goods and technologies in Canada. While a seemingly minor update — set to come into force after July 23^rd, 2021 — this change actually has very far-reaching implications for firms looking to stay in compliance with these important rules!

Per our previous blog, the Government of Canada’s Fall Economic Update has announced new rules which will change the GST/HST registration and collection regime for short-term rental accommodation platforms (like AirBnb) and the underlying persons offering the accommodations to ensure GST/HST is properly collected on these supplies.  This article gives a high-level overview of the proposed changes—which will be especially important to anyone who rents out their property on these platforms!

Per our previous blog, the Government of Canada’s Fall Economic Update has announced new rules which will change the registration and collection regime for fulfillment warehouses (like Amazon) to ensure that vendors collect GST/HST on the final price paid for their goods when they are sold in Canada.  This article gives a high-level overview of these specific changes.

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.

One of the emerging areas in criminal law in the 21^st century are the rules that surround the search and seizure of electronic devices like computers, notebooks and smartphones – particularly where those devices contain information covered by Solicitor-Client Privilege.

When the CRA executes a Search Warrant in the tax consequence, and seizes electronic storage devices like a notebook or an iPhone, the party subject to the Warrant may still rely on a claim of Solicitor-Client Privilege. This results in a unique court process which deals with how to isolate privileged documents that are otherwise stored in the device alongside non-privileged ones.

A recent case before British Columbia Supreme Court dealt with this issue, and is a good read for persons finding themselves subject to such a seizure.

One of the messier areas in tax law tends to be the case where “civil” tax default meets potential “criminal” tax fraud – with the consequences to the taxpayer moving beyond tax assessments and interest, to fines and potential time sentenced in the ‘Crow Bar Hotel’.