Tax & Trade Blog

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EMPLOYER HEALTH TAX: RELATED PARTY RULES

INCOME TAX RULES REIGN, BUT AS INTERPRETED BY ONTARIO?

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Ontario’s Employer Health Tax Act (the “Act” and the “EHT”) regime contains important associated-employer and related-party rules impacting things like EHT Exemptions and the calculation of payroll thresholds, as well as ultimate EHT liability. While the rules borrow heavily from Income Tax Act (“ITA”) definitions and concepts, the application of the rules in the EHT context is not always straight-forward and often influenced by administrative interpretation.

In this Indirect Tax Report, we review the EHT associated-employer variation of these rules and highlight practical difficulties arising when income tax concepts are applied for provincial purposes.

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TAX OBJECTIONS: WHAT HAPPENS NEXT?

APPEALS PROCESS MOVES SLOWLY UNTIL SUDDEN ACTION IS REQUIRED

As we have reported on, Canada Revenue Agency (“CRA”) and other government authorities appear to be ramping up their tax audit activity. While taxpayers have statutory rights to appeal assessments they view as incorrect by filing a Notice of Objection, what happens after filing those documents can be unclear.

Appeals processes initially move slowly and can feel a bit like a “black box”. Government officials are generally not forthcoming with updates, and it is not uncommon for taxpayers to hear nothing for months – or even years! However, when the appeal does advance, the timelines for action can suddenly become very short.

A failure to respond in time can result in an objection being denied, or the permanent loss of one’s further appeal rights.

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CRA INFORMATION REQUESTS - SHOPIFY 2

FEDERAL COURT DISMISSES CRA UNNAMED PERSON REQUIREMENT IN SHOPIFY 2

Among the most important decisions for GST/HST practitioners in 2025 were two Federal Court rulings dismissing applications by the Canada Revenue Agency (“CRA”) for unnamed persons requirements (“UPRs”) – a type of information demand in respect of an ascertainable group of unnamed persons that requires Court authorization – directed to Shopify Inc. (“Shopify”).

Below, we review the second of these two Federal Court decisions involving Shopify (Canada v. Shopify Inc., 2025 FC 969 – “Shopify 2”), in which the CRA failed to satisfy the requirement that the target group under its UPR be “ascertainable”.

For our review of the first Shopify decision, click here.

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CRA INFORMATION REQUESTS - SHOPIFY 1

FEDERAL COURT DISMISSES CRA UNNAMED PERSON REQUIREMENT IN SHOPIFY 1

Among the most important decisions for GST/HST practitioners in 2025 were two Federal Court rulings dismissing applications by the Canada Revenue Agency (“CRA”) for unnamed persons requirements (“UPRs”) – a type of information demand in respect of an ascertainable group of unnamed persons that requires Court authorization – directed to Shopify Inc. (“Shopify”).

Below, we review the first of these two Federal Court decisions (Canada v. Shopify Inc., 2025 FC 968 – “Shopify 1”), in which the CRA’s UPR was found not to have the required purpose of verifying compliance with a duty or obligation under Canadian tax law.

For our review of the second Shopify decision, click here.

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TCC: NEW HOUSING REBATES & SOCIAL JUSTICE

TCC DECISIONS SEEM TO BE RECOGNIZING MODERN HOUSING REALITIES

Homeowners who claim New Housing Rebate often face Canada Revenue Agency (“CRA”) review. The central issues in these cases are often whether the homeowners intended to use the subject home as a primary place of residence (or for some other purposes) and whether the home was in fact occupied as a place of residence following construction or renovation.

While the Tax Court of Canada (“TCC”) has traditionally adopted a fairly rigorous approach when interpreting and applying these two requirements, two recent TCC decisions seem to reflect a more flexible approach, perhaps aligning with modern housing realities.