Tax & Trade Blog

British Columbia’s (“BC’s”) new PST rules regarding online marketplaces have been in effect for about three months now. First announced in the 2022 provincial budget, the provincial government claims the changes will close tax loopholes and “better adapt BC’s consumption taxes to the rapid expansion of e-commerce during the pandemic.” It is expected to result in an additional 100 million of revenue for the province in each of the next two years.

But where is all that new revenue really coming from?

On September 1, 2022, the Select Luxury Items Tax Act (“SLITA”) officially came into effect. Vendors and importers of subject goods should be registered with the Canada Revenue Agency (“CRA”), paying tax, and keeping track of the information they will need to file their first returns.

While we have written about the luxury tax previously, this blog provides further practical details on the implementation of the luxury tax in light of the CRA’s recently-released administrative guidance.

We have recently seen many clients make improper “corrections” or “amendments” to previously-filed GST Returns, which ultimately causes even more problems, and leads to unrecoverable GST!

In fact, there is no legislative basis for filing a corrected or amended GST Return.  We regularly see clients who chose to deal with past errors by making “after-the-fact” changes to “GST collectible” or “GST credits claimed” in later periods – perhaps under the theory that if net tax was under-reported in January, it can be fixed by adding extra “net tax” to July!

While errors on GST Returns are a fact of life, the way that these mistakes are corrected can cause bigger problems — which often leads to “unrecoverable GST” (think: lost money)!

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.