When a Canada Revenue Agency (the “CRA”) audit concludes and a Proposed Assessment issued, it is presented in a “Statement of Proposed Audit Adjustment”. This document outlines the CRA’s Assessment of the additional taxes owed. At this stage, significant work needs to take place to try and understand the basis for the Proposed Assessment and attempt to rebut the CRA’s Assessment position.
Because CRA is the “elephant in the room” (and typically does what it wants to do), where an Assessment is finalized and raised, it is a very signification matter, for the following reasons.
In a previous blog, and Part 1 of this Series, we discussed CRA’s recent audit activity focussed on Canada’s Vaping Industry, which is significantly impacting vaping licensees, and leading to a number of different assessments for duty liability under the under the Excise Act, 2001. An even more serious governmental focal point, however, is likely to be Health Canada’s proposed regulatory ban on flavoured or sweetened vaping substances and products, which appears to be another significant storm brewing for the industry.
Part II of this series on the vaping industry focuses on this issue, its regulatory history, and the expected cataclysmic event it may entail for the economic viability of many of these businesses.
Canada’s federal and provincial taxes of “vaping products” is really a vaping duty imposed under the Excise Act, 2001(the “Vaping Duty” and “EA 2001”), and the CRA is in charge of administering that excise duty – Including related audit activities.
CRA appears to be ramping up its audit activity in this area, now issuing proposed and final assessments under the taxing provisions in EA 2001 sections 158.57, 158.58 and 158.61.
