Tax & Trade Blog

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TEMU & ALIEXPRESS PLEDGE TO HEALTH CANADA

MARKETPLACES JOINING PLEDGE IS GOOD NEWS FOR DIRECT SELLERS

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Health Canada’s Canadian Product Safety Pledge (the “Safety Pledge”), which we have previously discussed here, continues to expand, with online marketplaces Temu Canada and AliExpress now joining Amazon Canada and eBay Canada as signatories.

The Safety Pledge is a voluntary compliance initiative aimed at increasing product safety for consumer products and cosmetics available to Canadians online. By signing the Safety Pledge, Temu Canada and AliExpress have committed to taking 14 preventative and corrective actions intended to strengthen the safety of products sold through their platforms.

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LEGAL QUESTION – SHOOULD YOU ASK AN AI?

PITFALLS ASSOCIATED WITH USING AI TOOLS FOR "LEGAL SERVICES"

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The use of Large Language Model tools (commonly referred to as “AI”) such as ChatGPT and Claude, is becoming quite common in Canada. But what are the ramifications of using such tools for legal issues, such as legal research, legal advice, and the drafting of legal documents such a contracts, pleadings, or legal submissions?

In this report, we review some of the risks associated with relying on AI tools as a replacement for legal professionals.

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EMPLOYEE OR INDEPENDENT CONTRACTOR?

SIGNIFICANT TAX & LEGAL CONSEQUENCES COME WITH MISCLASSIFICATION

One area of Indirect Tax that is often underemphasized and underappreciated by businesses and tax professionals alike is the proper classification of employees and independent contractors. Canada’s rules generally mirror those in the United States, and in both jurisdictions, misclassification of a worker (i.e., classifying the worker as an independent contractor instead of an employee) can give rise to significant tax and legal consequences.

In this Report, we review the Canadian and U.S. rules, and the challenges businesses face in navigating this classification process.

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ZERO-RATED OR TAXABLE FOOD & DRINKS?

GST: FINE TECHNICAL LINE BETWEEN ZERO-RATED & TAXABLE FOR FOOD & DRINKS

The supplies of food and beverages that are for human consumption are generally zero-rated for GST/HST purposes in Canada – meaning that a 0% rate of tax applies!   There are exceptions, however, particularly where the food or beverage falls into one of the specific exclusions set out in Part III of Schedule VI to the Excise Tax Act (“ETA”).  This set of rules generally reflects Canada's intention that most food and drink products are free of GST, with the exceptions being fairly limited in scope.

Regrettably, recent Tax Court of Canada (“TCC”) jurisprudence may be applying a more restrictive approach and have been more willing to deny zero-rated treatment based on a threshold inquiry into whether the product qualifies as “food” or “beverage” in the first place.  This is a marked change from earlier jurisprudence.

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NEW CRA FOCUS ON T4A REQUIREMENTS?

BUDGET 2025 CONTAINS POTENTIALLY IMPACTFUL RULES FOR DIRECT SELLERS

Canada's Budget 2025 was launched on November 4^th with the energy of a lead balloon. 

Despite the doom and gloom focus on continuing deficit financing by the current Liberal Government – off-loading today’s woes onto the backs of our children and grandchildren – there was also a not-so-well-publicized change that may impact Direct Sellers.

T4A Reporting

T4A Reporting has been a continuing issue in Canada for many Direct Sellers, especially those operating outside of the traditional "buy-and-resale" model with a distributor selling to his/her own customers (think Amway and Fuller Brush).