Tax & Trade Blog

Carbon pricing in Canada can be confusing for both new entrants to the market and established players. Part of this comes from Canada’s patchwork system and mix of different rules across the country. Adding to the complexity is the fact that the Greenhouse Gas Pollution Pricing Act (“GGPPA”) acts as a “backstop” if provincial/territorial legislation is not strict enough!

Businesses need to be aware of multiple different rules – federal (under the GGPPA, which applies in the so-called “listed provinces” outlined below) and provincial/territorial (if applicable to the particular jurisdiction in which they are operating). Figuring out where one has to register is just the first step!

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.

It seems that the only thing hotter than inflation these days is CRA’s auditing and assessments in missing traders, carousel schemes and shams. Affected industries so far include telecom, gold and precious metals, diamonds and precious gems – and even include mom-and-pop start-ups in the home-made muffins industry.   Left unchallenged, these assessments can invariably lead to corporate bankruptcy and insolvency and, more problematically, can involve personal assessments of directors, spouses and children!

After our February blog post, the Department of Finance finally released draft legislation for its “luxury tax” on vehicles, aircraft and vessels (“items”). Assuming it is passed, the Select Luxury Items Tax Act (“SLITA”) is scheduled to come into force on September 1, 2022. Any business selling items to which SLITA applies will have to register with the federal government, pay the luxury tax, and file quarterly returns!

Taxpayers who seek to challenge tax assessments made by the Canada Revenue Agency (“CRA”) usually have the right to file a Notice of Objection (“Objection”), and those Objections are usually due within 90 days of the mailing date of the assessment.

Objection is the first and most important step of the taxpayers appeal process for any tax assessment, and the 90-day deadline generally should not be missed. For taxpayers that have missed the 90-day deadline, all hope is not lost, as there are special rules that might allow for a late-filed Objection. Taxpayers seeking to benefit from these rules should generally seek legal advice to understand and select the most appropriate next steps!