As we initially described here, the Canada Revenue Agency (“CRA”) continues auditing and assessing individual home-owners who have either substantially re-built their homes or commissioned the construction of a new home for their own use on the resale value of those homes in a number of alarming instances.
On March 20, 2024, Public Safety Canada (“PSC”) released updated guidance (“Guidance”) on the application of the Fighting Against Forced Labour and Child Labour in Supply Chains Act (the “FCLA”).
While PSC’s update is aimed to provide clarity, it left many ambiguities, particularly regarding the definitions of “consolidated financial statements”, “asset” and “control”. These terms play a critical role in determining whether a foreign entity may fall within the reporting requirements of the FCLA.
As we wrote about here Canada’s carbon tax system is complicated and causing problems.
Recently, the Canada Revenue Agency (“CRA”) has been auditing and issuing assessments based on the technical requirements of the legislation.
Background
Canada’s carbon tax legislation is called the Greenhouse Gas Pollution Pricing Act – and we will refer to it as the Carbon Tax Act or “CTA”. The CTA was enacted in 2018. Part of it enacts a “fuel tax” (called a “Fuel Charge” for optics) which adds additional Canadian taxation points to all transactions involving combustive fossil fuels. The Fuel Charge is levied under Part I of the CTA.
The Canadian International Trade Tribunal (the “CITT”) announced an Order in Expiry Review RR-2023-001 on March 20, 2024 (the “Order”), continuing its finding made on April 23, 2018, in Expiry Review NQ-2017-005, in respect of the dumping and subsidizing of all dry wheat pasta originating in or exported from the Republic of Türkiye (the “Subject Goods”).
What is an Expiry Review
Expiry Reviews are conducted jointly by the Canada Border Services Agency (the “CBSA”) and the CITT to review prior Anti-Dumping Duty (“ADD”) or Countervailing Duty (“CVD”) findings made by the CITT (the “Findings”) under the Special Import Measures Act (“SIMA”). These Expiry Reviews generally occur every 5 years following the original finding or subsequent continuation orders (“Orders”).
In today’s economy, every dollar counts, a sentiment echoed by the Federal government. It appears that BC Finance also dances to this tune, as the province’s 2024 Budget includes an amendment to the definition of “software” in the BC Provincial Sales Tax Act(“PSTA”), retroactive to April 1, 2013!
While the amendment is described as “clarifying” the definition, it is difficult not to see it as BC Finance’s response to a recent tax appeal decision from the Supreme Court of British Columbia.
The Canadian International Trade Tribunal (the “CITT”) announced an Order in Expiry Review RR-2021-004 on October 19, 2022 (the “Order”), continuing its order made on January 4, 2017, in Expiry Review NQ-2016-002, in respect of the dumping of certain gypsum board products originating in or exported from the U.S., imported into Canada for use or consumption in the provinces of BC, AB, SK, and MB, as well as NT and YK (the “Subject Goods”).
In a “bad news case” for unsecured creditors, the Federal Court has confirmed that the CRA’s deem trusts over things like unpaid GST/HST and income tax source deductions take precedence to prevent loan repayment to unsecured creditors. This means that related and unrelated persons loaning money to Canadian small businesses on an unsecured basis (which is common - think about the loans being advanced by business partners, parents and spouses) are at risk when those businesses default on their tax obligations.
On March 27, 2024, the Canada Border Services Agency ("CBSA") received a representation from Tenaris Canada ("Tenaris"), requesting a reinvestigation of normal values and subsidy amounts for oil country tubular goods ("OCTG1") and seamless casing ("SC") exported from China. Under the CBSA’s policy, other interested persons have the opportunity to respond to this representation by submitting comments to the CBSA.
On March 8, 2024, the Canada Border Services Agency (“CBSA”) issued a Notice of Initiation of Investigation under the Special Import Measures Act (“SIMA”) in respect of the alleged dumping of certain wire rod from China, Egypt, and Vietnam. This investigation was prompted by a complaint filed by an Ontario manufacturer.
The goods under investigation are more specifically described as:
Certain hot‐rolled wire rod of carbon steel and alloy steel of circular or approximately circular cross section, in coils, equal to or less than 25.5 mm in actual solid cross‐sectional diameter, originating in or exported from the People’s Republic of China, the Arab Republic of Egypt and the Socialist Republic of Vietnam (the “Subject Goods”).
In December 2023, the Supreme Court of Canada dismissed the Crown’s application for Leave to Appeal the Federal Court of Appeal (“FCA”) decision in Canada v. Dr. Kevin L. Davis Dentistry Professional Corporation 2023 FCA 76(“Davis”), leaving the FCA decision as the state of the law. The FCA had upheld the Tax Court of Canada’s (“TCC”) judgment (2021 TCC 25) allowing Dr. Davis to claim input tax credits (“ITCs”) incurred in the course of suppling orthodontic appliances and services to patients.
The direct selling industry poses a number of unique challenges for Canadian sales tax regimes. The patchwork of separate federal GST/HST and provincial PST/QST regimes only further complicate the matter, making it difficult for new entrants to the Canadian market to determine their collection, remittance, and reporting obligations. This revised article from our 2023 primer provides a brief overview these optional sales tax rules.
Canada Border Services Agency (“CBSA”) has announced that the final iteration of its recent revamping of Canada’s import systems will arrive May 13, 2024.
Direct Sellers importing their products into Canada for further distribution or sale to their salesforce or customers (including with the assistance of a customs broker) – will be particularly concerned with these changes!
Direct Sellers and the distributor and representative businesses that work closely with them should be no stranger to oversight and scrutiny from all levels of government, no matter where they operate.
The Canada Revenue Agency (“CRA”) recently added one more headache for in-house Law Departments and other Compliance Professionals with Direct Selling Companies, issuing a warning exclaiming: “Watch out for tax schemes involving multilevel marketing businesses!” (the “Warning”).
Quebec’s controversial Bill 96, officially titled “An Act respecting French, the official and common language of Quebec” (“Act”), was passed in 2022. Bill 96 amends the Charter of the French Language (“Charter”) to try and ensure that French remains the predominant language in commercial activities within Quebec. Practically speaking, Bill 96 has made things extremely complicated for any English-based Canadian or US business trying to operate in Quebec, including both Canadian and US Direct Sellers.
The Canadian International Trade Tribunal (“CITT”) announced an Order in Expiry Review RR-2021-005 on December 29, 2022 (“Order”), continuing its order made on April 7, 2017, in expiry review RR-2016-001, in respect of the dumping of Pup Joints products from the People’s Republic of China (“Subject Goods”).
What is an Expiry Review
Expiry Reviews are conducted jointly by the Canada Border Services Agency (“CBSA”) and the CITT to review prior Anti-Dumping Duty (“ADD”) or Countervailing Duty (“CVD”) orders made by the CITT (“Orders”) under Special Import Measures Act (“SIMA”). These Expiry Reviews generally occur every five years following the original Orders or a subsequent renewal.
On January 18, 2024, the Canada Border Services Agency (“CBSA”) issue a Notice of Conclusion in the ongoing Expiry Review of Carbon Steel Welded Pipe 2 (“CSWP-2”) exported from the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (“Chinese Taipei”), India, Oman, South Korea, Thailand and the UAE (“Subject Goods”). The CBSA determined that the expiry of the Canadian International Trade Tribunal’s (“CITT”) order dated October 15, 2018, in Expiry ReviewRR‑2017‑005, is likely to result in the continuation or resumption of (i) dumping of Subject Goods (from all the above-noted countries) and (ii) subsidizing of Subject Goods (exported from India). A detailed Statement of Reasons for this determination was released on February 02, 2024.
On January 22, 2024, the CBSA issued a Notice of Retroactive Assessments in respect of certain Corrosion-Resistant Steel Sheet (“COR-2”) goods imported into Canada from Türkiye (formerly Turkey) and Vietnam.
Canadian importers of these COR-2 goods may soon find themselves on the receiving end of these retroactive assessments in respect of imports into Canda between December 2021 and November 2022!
A recent Federal Court of Appeal (“FCA“) decision in Pillon v. Canada (2024 FCA 24) highlights the difficulties that Tax Debtors will face if trying to avoid GST and income tax debts. Both the Excise Tax Act (“ETA”) and the Income Tax Act (“ITA”) have extremely powerful collections tools allowing the Canada Revenue Agency (“CRA”) to assess certain non-arm’s length persons (think spouses, children, relatives, close friends and associates) that have been transferred a Tax Debtor’s property for less than fair market value (“FMV”). These rules can even apply to corporate shareholders receiving dividends from delinquent corporations.
The new year brings an important new reporting obligation likely affecting many Canadian and some US-based Direct Selling businesses – and sadly, the in-house Law Department and other Compliance Professionals they employ!
New Canadian Forced Labour Legislation / Reporting Requirements
Canada’s Bill S-211, Fighting Against Forced Labour and Child Labour in Supply Chains Act (the “FCLA” and “Forced Labour”), came into force on January 1, 2024. These new Forced Labour rules are broadly aimed at eradicating Forced Labour from Canadian supply chains, by establishing annual reporting requirements, banning related imports and increasing non-compliance penalties.
The new year brings an important new reporting obligation likely affecting most Canadian and many US-based Oil, Gas and Petroleum businesses – and sadly, the in-house Customs & Trade Professionals they employ!
New Canadian Forced Labour Legislation / Reporting Requirements
Canada’s Bill S-211, Fighting Against Forced Labour and Child Labour in Supply Chains Act (the “FCLA” and “Forced Labour”), came into force on January 1, 2024. These new Forced Labour rules are broadly aimed at eradicating Forced Labour from Canadian supply chains, by establishing annual reporting requirements, banning related imports and increasing non-compliance penalties.
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