Tax & Trade Blog

Registrants are required to keep adequate books and records that provide the information necessary to ensure taxes payable under the Excise Tax Act (“ETA”) can be determined. What may happen if a taxpayer has failed to file tax returns, filed patently deficient ones and/or a taxpayer’s books and records are not reliable or do not exist?  Subsection 299(1) of the ETA states that the Minister is not bound by the contents of the return, but may assess by alternative means including the use of estimates or net worth approach. (Parallel provisions can be found under subsection 152(7) of the Income Tax Act.)

In Excise and GST/HST News No. 101 the CRA clarified that in its view doctors/dentists and other medical practitioners must charge GST/HST on their on-call fees. 

The recent Tax Court decision in Les Ventes et Façonnage du Papier Reiss Inc. v The Queen (2016 TCC 289) (the “Reiss Case”) places new emphasis on the verification obligations of GST/HST and QST registrants claiming input tax credits (“ITCs”), confirming and expanding the “duty of verification” first asserted by the CRA in Salaison Lévesque Inc v The Queen (2014 TCC 36: at para 86).

Amendments to the ETA’s closely related test were announced in the 2016 budget and received Royal Assent December 15, 2016.  They came into force March 22, 2017.

Rosenberg v MNR (2016 FC 1376) shows that the FC will uphold a contractual agreement entered into by the minister and a taxpayer.

CBS Canada Holdings Co. (2016 TCC 85)considered when a lawyer crosses the line between advocate and partisan, and when doing so results in a conflict with the lawyer’s responsibilities as an officer of the court.

The Customs Act requires corrections of errors in import declarations – such as a tariff classification, country of origin, or value for duty.  Each correction requires the filing of a form B2 adjustment request, which can be an onerous task when multiple corrections are required. The CBSA has an administrative practice that streamlines the procedure for authorized importers by allowing them to file a single blanket adjustment request - a single form with an attached spreadsheet - to process multiple corrections with one form.  However, the CITT decision in Worldpac Canada (AP-2014-021) shows that administrative practice does not have the force of law and a taxpayer’s reliance thereon involves risk. 

Over the past several years, the CRA Audit Division has directed more attention to businesses that use Employment Agencies for their staffing needs.  If your business deals with Employment Agencies, Temporary Labour, Staffing Agencies, or other similar entities, consider consulting us for strategies on safeguarding your ITCs.

In AG v. Bri-Chem Supply Ltd. et al. (2016 FCA 257), the Federal Court of Appeal (FCA) reproached the Canadian Border Services Agency (“CBSA”) for administrative practices that amounted to an abuse of process.

The TCC applied fundamental principles of statutory interpretation to conclude that the supply of police services by the Ontario Provincial Police (“OPP”) to the 407 ETR Concession Company Limited (“407 ETR”) constituted an exempt supply of a “municipal service” under section 21.

The Supreme Court of Canada rendered its first decision on the Customs Tariff in Canada v.Igloo Vikski Inc. (2016 SCC 38).  The decision provides guidance on applying the General Rules for the Interpretation of the Harmonized System (“General Rules”), particularly in the context of how the General Rules inform one another.

Two recent decisions advance the law of privilege. Lizotte v Aviva Insurance Company of Canada (2016 SCC 52) and MNR v Iggillis Holdings Inc. (2016 FC 1352) respectively clarify the difference between solicitor client privilege (SCP) and litigation privilege (LP), and also establish that so-called advisory common interest privilege (CIP) - privilege that protects transactional negotiations between parties with separate legal representation - does not exist in Canada. The two decisions are reminders of the scope of privilege in the tax context, and also highlight the importance of understanding the proper ambit of privilege when engaging in tax transactions or tax litigation.

In Fairmont Hotels Inc. (2016 SCC 56) and Jean Coutu Group (2016 SCC 55) the Supreme Court of Canada (the “SCC”) clarified the law of rectification.  The result might be disappointing for taxpayers and tax practitioners alike, yet the decisions bring Ontario back in line with the rest of Canada by establishing that an application for rectification refer to a detailed intention. 

The CRA has a mandate to improve compliance of GST/HST registrants and to encourage GST/HST registrants to meet their filing requirements.  As part of its commitment to this mandate, the CRA will be implementing changes to its current processes.

At the CRA Roundtable at the recent CPA’s 2016 Commodity Tax Symposium, the CRA declared a current mandate to use alternative audit methods more frequently.  Two recent cases are a useful reminder of what may be in store for Canadian GST registrants in that regard, namely 9103-4348 Québec Inc v The Queen (2015 TCC 220) (“The Golden Pub”), and 9091-2239 Québec Inc (2016 TCC 198) (“Hamade”)

The recent FCA decision, Canada v Chriss (2016 FCA 236), underscores the resignation obligations of directors.  If directors do not execute their resignations properly and completely, they will remain liable for the actions of the corporation, including director’s liability assessments issued by taxing authorities like the Canada Revenue Agency (“CRA”).

In Re Pallen Trust (2015 BCCA 22), the British Columbia Court of Appeal upheld an order for rescission, which effectively nullified a CRA reassessment.

In The Great-West Life Assurance Company v The Queen (2016 FCA 316) [“Great-West Life”], the Federal Court of Appeal upheld the TCC’s decision that services related to processing claims for drug benefits were not financial services, and so not exempt from GST/HST.

Section 141.1(3) of the of Excise Tax Act (“ETA”) broadens the scope of what is considered to be in the course of commercial activities to activity done “in connection with” extraordinary transactions such as starting and winding-up commercial activities.  The Tax Court of Canada (“TCC”), in Onenergy Inc. v. The Queen (2016 TCC 230), discussed how the section should be interpreted.

The recent Federal Court case Saad v CBSA (2016 FC 1382) is a cautionary tale in two respects.

In the first place, it is a reminder that travellers who are found not to have properly declared imported goods, risk having their vehicle seized by the Canadian Border Services Agency (“CBSA”), which has a broad range of powers under the Customs Act.