Every so often, decisions from the Tax Court of Canada (the “TCC”) and the Federal Court of Appeal (the “FCA”) highlight the intricacies of the GST/HST regime – particularly for financial institutions. The recent decision in Northbridge Commercial Insurance Corporation v. The King (2025 FCA 83) is a prime example. The FCA has now referred the case back to the TCC for a third hearing, highlighting the complexity of input tax credit (“ITC”) entitlements related to insurance supplies.
The federal government has announced that there will be a tax break from December 14th, 2024 to February 15th, 2025 on a broad range of consumer products, which is estimated will provide $1.6 billion in federal tax relief.
In addition to relieving the 5% GST, the HST component will be also fully removed in Ontario, Newfoundland & Labrador, Nova Scotia, New Brunswick, and Prince Edward Island.
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.
A great new year’s resolution for Directors of a Canadian private corporations is to brush up on GST/HST and income tax compliance! The reason is that where a corporation incurs a tax debt for GST, HST or income tax source withholdings, the directors of those corporations can be held personally liable. For GST/HST purposes, this potential liability encompasses virtually all the net tax obligations of the corporation!
A recent case demonstrates the high standard directors need to uphold, even when imposed with incredibly difficult situations in which the government has played a hand.
If there was such a thing as a “10-Alarm” fire, CRA’s public release of GST Interpretation RITS 202403 would seem to fit that bill.
In this April 2023 Interpretation – issued only a few weeks ago – CRA takes the view that Employers with pension funds invested in an insurer’s segregated funds, are NOT eligible to claim ITCs for the GST/HST payable on the investment management fees (“IM Fees”) paid directly out of those funds.
On one level of analysis, CRA has done an about-face and reversed a prior 2012 Ruling in this area (which seemed to have addressed the same situation). While CRA may disagree with that statement, this does appear to be a potentially significant “reinterpretation”.
Justice John Owen of the Tax Court of Canada has rendered one of the most important and potentially far-reaching decisions in 33 years of GST. While Fiera Foods Company v. The King, 2023 TCC 140is about some other things, the Tax Court’s keen observations about GST “Information Requirements” is its most important part: they require sufficient evidence to be obtained prior to claiming input tax credits (“ITCs”), but do not specify or require the “form” of that evidence.
On September 14, 2023 the Prime Minister announced upcoming legislation to remove the Goods and Services Tax (GST) on the construction of new apartment buildings.
The announcement also called on the provinces participating in the Harmonized Sales Tax (HST), or that impose their own provincial sales tax, to match the federal government’s rebate. In a twitter post the Ontario Minister of Finance has already indicated they will “work closely with Ottawa to do the same when it comes to Ontario’s portion of the HST.”
While the government of Canada appears focused on the political hot potato that is our residential housing industry, announcing new rules for rental houses are coming, the CRA is headed in the other direction, apparently targeting residential home-owners that have recently sold their homes, on the basis that the degree to which they fixed them up prior to sale caused the homes to become “new homes” and subject to full GST/HST on their fair market value.
As we blogged about here, in late 2022, Newfoundland and Labrador introduced a tax on sugar sweetened beverages (the “SSBT”). An often-overlooked aspect of Canadian indirect and excise taxes is the ability for certain taxes to compound, so that one pays a “tax on a tax”. This issue is particularly pronounced when supplies are subject to both GST/HST and a provincial excise tax.
A recent issue of the CRA Excise and GST/HST News clarified that the GST/HST is calculated on the total value of consideration including the SSBT and serves as an example of why it is important to consider how taxes interact in practice.
An often-overlooked aspect of Canadian indirect tax is the degree to which provincial fuel and carbon tax statutes vary across the country — and the surprising and significant consequences for non-resident businesses with limited connections to Canada.
US and international petroleum traders selling fuel into Canada present a good example of the complexities in this area, and how the rules can vary substantially from province-to-province leading to unforeseen registration, licensing, and Fuel Tax collection requirements!
