Tax & Trade Blog

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MISSED A GST/HST REBATE DEADLINE?

TCC SAYS SUBSECTION 296(2.1) MAY NOT SAVE LATE GST/HST REBATE CLAIMS

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Taxpayers who fail to file a GST/HST rebate application within the applicable two-year limitation period may, in some circumstances, look to the relieving provisions in subsection 296(2.1) of the Excise Tax Act (“ETA”) for assistance. That provision seemed to require an otherwise unclaimed (or statute-barred) GST/HST rebate to be applied against a taxpayer’s net tax if the period was later audited.

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EXCISE ACT 2001 RECORDKEEPING REQUIREMENTS

MORE THAN MEETS THE EYE — CRA’S STRINGENT REQUIREMENTS

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The Excise Act, 2001 (“EA 2001”) governs the taxation and regulatory framework applicable to specified goods, including tobacco, wine, spirits, and, more recently, vaping products. Recordkeeping requirements under the EA 2001 are among the most stringent in Canadian tax legislation. In our experience, CRA is increasingly relying on imperfect or incomplete records as a basis for assessing additional duty, interest, and, in some cases, significant penalties.

In this Indirect Tax Report, we review the statutory requirements for books and records under the EA 2001 and highlight key compliance risks and practical traps for industry participants.

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WHEN IS CANNABIS, CANNABIS?

CRA TAXING TRIM LIKE CANNABIS

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Cannabis cultivators and producers will generally be aware of the two-tier flat tax that applies to the production of cannabis products, such as pre-rolls. That is, a higher tax rate of $0.25 per gram applies to flowering material, while a lower tax rate of $0.075 per gram applies to non-flowering material – putatively on the basis that it is far less potent in terms of cannabinoid content (THC and CBD).

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HST CANNOT BE SET OFF AGAINST DEBTS OWNING

BCAA CONFIRMS HST CANNOT BE SET OFF AGAINST SUPPLIER’S DEBTS

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Many commercial agreements include broad rights of set-off, which sophisticated businesses use to net out liabilities between parties. While that seems straightforward in commercial terms, businesses run into problems when applying this practice to GST/HST. Under the Excise Tax Act, HST collected – or collectible – by a supplier is NOT the supplier’s money to begin with. Rather, it is money held in trust for the Crown.

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GST/HST REGISTRATION FOR CONDO CORPS

WHEN TO REGISTER, TAXABLE STATUS OF SUPPLIES, CAN BE TRICKY QUESTIONS

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Property managers and board directors of condominium corporations (“Condo Corps”) often assume that registration for GST/HST under the Excise Tax Act (“ETA”) is not required because supplies made to residential condominium units are exempt of GST/HST.

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AMENDMENTS TO INDIRECT TAX RULES INCOMING

BILL C-31 NOW BEFORE FINANCE STANDING COMMITTEE & NEAR ENACTMENT

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As a follow up to our previous report on Canada’s Budget 2025 (the “Budget”), certain indirect tax measures proposed in the Budget are now being considered by Parliament, as the Budget 2025 Implementation Act, No. 2 (“Bill C-31”) received its second reading on June 3, 2026, and is currently at the House of Commons Standing Committee on Finance for consideration.

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BC HEADING BACK TOWARDS HARMONIZATION?

EXPANSION OF BC’S PROVINCIAL SALES TAX NARROWS THE GAP WITH THE HST

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As we previously blogged on here, British Columbia (“BC”) recently announced a further expansion of its Provincial Sales Tax (“PST”) base to certain goods and services including new professional services like accounting, architectural, and real estate services.

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CRA BUSINESS ACCOUNT: AUTHORIZATION TRAPS

WHO CAN ACCESS WHAT?

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Most Canadian businesses assume that once an employee or professional advisor has been authorized to deal with the Canada Revenue Agency (“CRA”), that individual has the immediate ability to access and update all of the business’s online CRA information. As the CRA recently confirmed at an industry roundtable, that assumption is incorrect, with different authorization levels permitting different activities and access to one CRA Account not necessarily providing access to others.

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CRA ADOPTS 2-YEAR AUDIT WORKPLANS

LARGE BUSINESSES UNDER AUDIT TO FACE BROADER INITIAL RECORDS REQUESTS

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The Canada Revenue Agency (“CRA”) has recently announced an important administrative change affecting many large business audits (“Audits”). More specifically, CRA has advised at a major industry roundtable that rather than examining one taxation year at a time, Auditors may now adopt a two-year Audit workplan and request records from multiple years at the outset of an Audit.

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TCC: NO EASY WAY TO PRE-PAY QUARTERLY GST

TAX AUTHORITIES WILL NOT AUTOMATICALLY APPLY SURPLUS TO INSTALLMENTS DUE

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Quarterly GST/HST installments are a persistent administrative headache for many business owners. However, a recent Tax Court of Canada (“TCC”) decision proves there are no easy shortcuts around these recurring compliance duties.

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NEW BUDGET TWEAKS INDIRECT TAX RULES

BUDGET 2025 HARD TO CELEBRATE BUT PROPOSES SOME GOOD INDIRECT TAX CHANGES

Canada's Budget 2025 was launched on November 4^th with the energy of a lead balloon. Despite the doom and gloom focus on the continuing deficit financing by the Liberal Government – off-loading our current woes on the backs of our children and grandchildren – there were some (largely) positive changes from an Indirect Tax perspective.

The highlights, in our view, are as follows.

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ONTARIO'S ELECTRICITY EXPORT TAX

PREMIER FORD ANNOUNCES EXPORT TAX, BUT WILL IT BE LEGAL?

On March 4, 2025, Ontario’s Premier Doug Ford announced further a retaliatory measure to the recently announced Trump tariffs, indicating that Ontario would apply a tax on exports of electricity to the United States (“US”). While that announcement might make many Ontarians (and Canadians) feel good about "taking a stance", one wonders whether Ontario has the legal powers to do what it says it is going to do.