Tax & Trade Blog

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ITC ENTITLEMENT ON FINANCIAL SERVICES

THIRD TIME'S THE CHARM FOR NORTHBRIDGE?

Every so often, decisions from the Tax Court of Canada (the “TCC”) and the Federal Court of Appeal (the “FCA”) highlight the intricacies of the GST/HST regime – particularly for financial institutions.  The recent decision in Northbridge Commercial Insurance Corporation v. The King (2025 FCA 83) is a prime example.  The FCA has now referred the case back to the TCC for a third hearing, highlighting the complexity of input tax credit (“ITC”) entitlements related to insurance supplies.

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CLOUD SERVICES & PROVINCIAL SALES TAX

A CLEARER FORECAST IN MANITOBA & WESTERN CANADA

It only got a single line in Manitoba’s 2025 budget - unlike housing measures that came with charts and headlines - but the new provincial sales tax on cloud services could bring just as much fiscal weight.  As part of its 2025 budget, Manitoba announced it will apply its 7% Provincial Sales Tax (“PST”) to Software as a Service (“SaaS”), Platform as a Service (“PaaS”), and Infrastructure as a Service (“IaaS”), starting January 1, 2026. 

Manitoba is the latest to adopt this trend, following BC (which we wrote about here) and Saskatchewan*. The message across Western Canada is clear: cloud services are in the “net tax”!

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PRESIDENT TRUMP RELIEVES AUTO TARIFFS

NAVIGATING THROUGH TARIFF TROUBLE

On April 29^th 2025, President Trump suspended the operation of automotive tariffs and provided other relief in the form of an import adjustment offset (see Proclamation here).  Those original automotive tariffs were announced on March 26 2025 (see Proclamation here).  In that original proclamation, the President imposed a 25% tariff on automobiles set to begin on April 3^rd.  He further announced a 25% tariff on automobile parts to begin no later than May 3^rd.  These automotive tariffs included articles made of steel and/or aluminum.  The President then issued a further proclamation which modified the March 26 2025 tariffs. 

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AIRBNB HOMES SALES SUBJECT TO GST/HST

FCA CONFIRMS SALE OF AIRBNB PROPERTIES SUBJECT TO GST/HST

The Federal Court of Appeal (“FCA”) has recently confirmed a Tax Court of Canada (“TCC”), ruling that the sale of a property used for short term rentals on Airbnb are subject to Federal GST/HST.

In the short term, this decision will increase the cost of properties at a time when real estate prices are already deflated across Canada.  We should expect to see that depreciation hit condominiums.

With proper planning, this tax consequence (i.e., GST/HST applied to the sale of Airbnb properties) can be ameliorated, but experienced GST/HST counsel will be required.

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TRUMP TARIFFS & CANADIAN MADE CARS

HARD TIMES REVING UP FOR CANADIAN AUTOMOTIVE SECTOR

On Wednesday March 25^th, the President signed a proclamation which invoked s. 232 of the Trade Expansion Act of 1962, s. 604 of the Trade Act of 1974 and Section 301 title 3 of the U.S. Code.  This new Executive Order has imposed a 25% tariff on imports of automobiles and certain automobile parts. 

What is a tariff?

A tariff is a duty imposed on the import of goods into a country, usually at a stated percentage, with the importer charged the corresponding amount based on the "value for duty" of the good.  A 25% tariff on a $50,000 car is $12,500.  Tariffs, if paid by a wholesaler or retainer are usually passed on down the supply chain and borne by the final consumer.  In that sense, a tariff functions like a tax; the government imposes a price on goods making those goods more expensive.  The hope is that by increasing the price of foreign goods, citizens will purchase homegrown alternatives.