Tax & Trade Blog

2023 is shaping up to be quite a year for businesses operating in the real estate industry, with the Canada Revenue Agency (“CRA”) continuing aggressive industry audits (which have now made their way to court), and new tax rules for new housing assignments under the Excise Tax Act (“ETA”) and house flippers under the Income Tax Act (“ITA”)!

First Nations individuals are granted special tax status under section 87 of the Indian Act (the “Act”) which effectively exempts them from taxation in respect of personal property “situated on a reserve” (the “s. 87 exemption”). This unique exemption transcends all taxing legislation in Canada, federal or provincial.

The courts’ interpretation of s. 87 has evolved over the years but, until now, it has only applied in the context of reserve property.

A recent decision of the British Columbia (“BC”) Court of Appeal (“BCCA”) has seemingly expanded the scope of s. 87 to off-reserve property – albeit in the context of a Band that no longer had a reserve.

On November 28, 2022, the Canadian international Trade Tribunal (“CITT”) issued a notice that it will be conducting an expiry review of its finding regarding stainless steel sinks originating or exported from China. Anyone wanting to participate in the expiry review must file a Notice of Participation with the CITT by December 13, 2022!

Both domestic producers and exporters should consider participating in the expiry review, as current anti-dumping duties (“ADDs”) for goods without a normal value are 103.1%, and countervailing duties (“CVDs”) are 264.94 Renmibi per unit!

On November 3, 2022, the Canadian International Trade Tribunal (“CITT”) released reasons in respect of its October 19th Expiry Review Order. The Order continued the CITT’s original 2017 finding that the dumping of gypsum board originating in or exported from the United States has caused injury to Canadian domestic injury.

The Order effectively means that the current anti-dumping duties (“ADDs”) of up to 324.1% will remain in place for Subject Goods originating in or exported from the United States.

The effect of the Canada Revenue Agency’s (“CRA”) administrative policies on GST/HST audits is often misunderstood by taxpayers and CRA auditors alike. While policies carry some interpretive value, they do not supplant actual law in the form of legislation and regulations.

This sometimes makes relying on CRA administrative policy a risky proposition, particularly where the policy provides a benefit or relief against the legislation and regulations. This is because where CRA assesses a registrant for non-compliance with a beneficial policy, the Tax Court is bound to apply the legislation and regulations as-written, and cannot allow a CRA policy – even one that benefits the taxpayers – to take precedence over the law.

The decision in Dr. Kevin L. Davis Dentistry Professional Corporation v. The Queen, 2021 TCC 25 (“Dr. Davis Dentistry”) considered this very issue.

On October 31, 2022, the Canadian Border Services Agency (“CBSA”) issued a notice that it will be conducting a re-investigation in respect of corrosion-resistant steel sheet (“COR”) imported from China, Chinese Taipei (i.e., Taiwan), India and South Korea (the “Listed Countries”). CBSA has issued a Request for Information (“RFI”) to both exporters and importers, and responses are due December 7, 2022!

Normal values established during the re-investigation will be effective as of the end date of the re-investigation, and all normal values currently in place will expire on that date.

On September 14, 2022, the Canadian International Trade Tribunal (“CITT”) issued an Order continuing its finding of a “threat of injury” in respect of copper pipe fittings originating in or exported from the United States, South Korea, or China (“CPF”).

The Order effectively means that the current anti-dumping duties (“ADDs”) of up to 242% will remain in place for Subject Goods originating in or exported from the listed countries, along with countervailing duties (“CVDs”) of 17.73 Renminbi per kilogram for goods originating in or exported from China.

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 errors by making “after-the-fact” changes to “GST collectible” or “GST credits claimed” in later periods – perhaps believing 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 (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.

Effective July 1, 2022, tobacco retail dealers in British Columbia (“BC”) must register to collect and remit provincial sales tax (“PST”).

The tobacco industry is no stranger to high taxes and complicated regulatory schemes – but BC appears made the situation even worse, by making provincial sales tax (“PST”) apply on top of its pre-existing stand-alone tobacco tax!

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.

On October 14, 2022, the Canada Border Services Agency (“CBSA”) issued a notice that it will be conducting a re-investigation in respect of oil country tubular goods (“OCTG”) and certain seamless casing originating in or exported from China.  Responses to the CBSA’s Request for Information (“RFI”) are due November 21, 2022!

Normal values established during the re-investigation will be effective as of the end date of the re-investigation, and all normal values currently in place will expire on that date.  Exporters of Subject Goods from China should consider cooperating with CBSA, as the potential anti-dumping duties (“ADDs”) for goods without normal value are as high as 166.9% for OCTG and 91% for seamless casing!

Lawyer-client relationships enjoy what is commonly referred to as solicitor-client privilege – or lawyer-client privilege. Regrettably (and surprisingly to some), accountants do not have this protection!

As the recent Federal Court of Appeal (“FCA”) decision in Zeifmans LLP has confirmed, where pushed for client information by the CRA, accounting firms – but not law firms – are required to disclose client information, including work done in tax situations!

On September 8, 2022, the Canadian International Trade Tribunal (“CITT”) issued an Order continuing its finding of a “threat of injury” in respect of hot-rolled carbon steel plate and high-strength low-alloy steel plate originating in or exported from a number of countries (as defined by CBSA and CITT: “PLA7”).

The Order effectively means the current anti-dumping duties (“ADDs”) of up to 59.7% will remain in place for Subject Goods originating in or exported from the listed countries, with the exception of Subject Goods exported from South Korea by Hyundai Steel Company (“Hyundai Steel”).

On September 8, 2022, the Canada Border Services Agency (“CBSA”) issued a notice that it would be conducting a re-investigation in respect of certain concrete rebar originating in or exported from Turkey (RB1). Responses to the CBSA’s Request for Information (“RFI”) are due October 17, 2022!

Normal values established during the re-investigation will be effective as of the date of the end of the re-investigation, while normal values currently in place will expire on that date. Importers of Subject Goods from Turkey should consider cooperating with CBSA, as the potential anti-dumping duties (“ADDs”) are as high as 41%!

An often-misunderstood aspect of the liquor industry by aspiring brewmasters and restauranteurs is the sheer number of regulatory steps required to import, manufacturer, distribute, and/or sell alcohol in Canada.  Complicating matters is the fact each province may have its own separate rules and licensing regimes.

This blog explores the various provincial licenses required to start an Ontario liquor business.

On September 8, 2022, the Canadian International Trade Tribunal (“CITT”) issued an Order continuing its finding of a “threat of injury” in respect of Oil Country Tubular Goods originating in or exported from a number of countries (“OCTG2”).

The Order effectively means that the current anti-dumping duties (“ADDs”) of up to 37.4% will remain in place for Subject Goods originating in or exported from the listed countries (apart from the Philippines*), with the exception of Subject Goods exported from South Korea by Hyundai Steel Company (“Hyundai Steel”), and from Turkey by Borusan Mannesmann Boru Sanayi ve Ticaret A.Ş. (“Borusan”).

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?

The Canadian tobacco industry is among the most highly and intensely regulated industries in the country – albeit largely policed by Provincial Governments. In Ontario, for example, regulation crosses all levels of the production, manufacturing and distribution process, starting with the actual farming of tobacco and ending with the final sales to the ultimate consumers of the products (i.e., smoking for their own consumption).

While many in the tobacco industry will be aware of the Ontario Ministry of Finance’s (“MOF”) involvement in assessing and auditing for tax at the wholesale distribution stage or monitoring tax compliance among Ontario retailers and convenience stores, the MOF’s audit activities actually start much sooner, and include audits and verification of tobacco farming activities.

Fresh off of its announcement of a major plastic ban (see our prior blog here), the Canadian federal government is now also moving forward with a plan to heavily regulate the plastics that do remain in the Canadian economy, by imposing a mandatory federal “plastics registry”.

The Liberal Government plan is currently in the consultation stage, which means that producers, importers, distributors and retailers have until October 7, 2022 to provide input.