Tax & Trade Blog

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CRA GST & INCOME TAX AUDITS

UNDERSTANDING A CRA AUDITOR'S POWERS & METHODS

As most people understand, “Audits” are the Canada Revenue Agency’s (CRA) primary tool for verifying voluntary compliance with Canada’s taxing legislation, including the Excise Tax Act (ETA) for GST purposes, and the Income Tax Act (ITA) for income tax obligations.

Less well known is the scope of the CRA’s powers when it comes to demanding answers to its questions and reviewing business records.  In this Tax Audits Series Report, we examine these broad powers, and what taxpayers can expect when audited.

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GST 201: CAPITAL PROPERTY

UNDERSTANDING THE FINE LINE BETWEEN CAPITAL & NON-CAPITAL PROPERTY

This is another in our GST 201 Series Reports, written to provide in-depth analysis of key topics under Canada's GST/HST regime.

In this Report, we focus on “capital property”, an overlapping concept under both the ITA and ETA that determines how special input tax credit rules apply to commercial activities.

Determining whether a property is capital is a fact-driven exercise, and even small factual differences can lead to very different results.

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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.