Tax & Trade Blog

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TRUMP'S NEW TARIFFS - NOT HURTING CANADA?

TRUMP TARIFFS DO NOT APPLY TO CUSMA GOODS

Much of the current commentary surrounding the new US tariff measures has overlooked a central point – namely, that broad-based US tariff actions do NOT apply to Canadian-origin goods that properly qualify under CUSMA.

There are certainly some exceptions like in militarily strategic sectors (like steel and aluminum) and in sensitive economic sectors (like automotives and lumber) but the wider narrative suggesting sweeping tariff exposure for Canadian exports to the US is probably overstated. We provide additional insight below.

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BC EXTENDS PST TO NEW SERVICES

PROVINCE ANNOUNCES EXPANSION OF SALES TAX TO PROFESSIONAL SERVICES

British Columbia has recently announced a further expansion of its Provincial Sales Tax (“PST”) base – a move that will not surprise those who have watched the province’s post-HST trajectory.

BC briefly participated in Canada’s Harmonized Sales Tax (“HST”) system in 2010, only to exit following a 2011 referendum and revert to its standalone PST system in April 2013. Since returning to a traditional retail sales tax model, the defining feature of PST policy has been base expansion – likely to help address recent provincial fiscal commitments and infrastructure projects.

We review the latest plan below.

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BATTLE WON BUT TRADE WAR NOT OVER?

US SUPREME COURT RULES INITIAL ROUND OF IEEPA TARIFFS UNLAWFUL

In a major development of the Canada-US Trade War (the “Trade War”), the Supreme Court of the United States (“SCOTUS”) in its decision of Learning Resources, Inc. et al. v. Trump, No. 24–1287 (“Learning Resources”), ruled that President Trump’s initial round of tariffs under the International Emergency Economic Powers Act (“IEEPA”) targeting Canada, Mexico and China are unlawful.

In this report, we provide a brief review of SCOTUS’ decision in Learning Resources, along with some implications for the Trade War moving forward, including President Trump’s potential response.

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AUTOMOTIVE REPORT: TARIFF CHAPTER 87

CBSA'S VERIFICATION AUDITS TARGET VEHICLE TIRES

For many in the automotive industry, there is a temptation to import foreign-made goods (i.e., non-USMCA-qualifying) for use in production processes or as parts and sub-components for vehicles and automotive systems. They are often less costly.

At the same time, many of these imports attract significantly higher duty rates, which can create pressures to classify them under potentially alternative tariff headings with lower rates of duty.

Our recent file experience has demonstrated that this is often a short-lived strategy, as the CBSA’s verification procedures will eventually put these classification decisions to the ultimate test.

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DEVELOPING BIAS DOCTRINE IN CANADA

ONTARIO COURT OF APPEAL: IF BIAS SHOWN, DECISION MUST BE OVERTURNED!

As we have written here before, proving bias tends to be an uphill battle. Because of that, this ground of complaint is rarely pursued in tax or trade appeals. That may be changing, given a recent ruling of the Ontario Court of Appeal (“ONCA”) in a trade remedy case, which confirmed that if a complainant can prove a “reasonable apprehension of bias” in the decision-making process, the entire decision must be overturned!

In this Tax Appeals Series blog, we review that decision and examine the potentially HUGE consequences that can follow.

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NO ITCS FOR CREDIT CARD LOYALTY EXPENSES - FOR BANKS

FCA SKATES FINE LINE: CONCLUDES ITCS FOR PC BANK BUT NOT FOR AMEX!

In a long running tax issue in Canada, the question has been whether Financial Institutions like banks and credit card companies are entitled to take Input Tax Credits (“ITCs”) when incurring Goods and Services Tax (“GST”) on expenses related to associated loyalty point programs. The Tax Court of Canada (“TCC”) has been fairly consistent on this question (answering it in the negative) but the Federal Court of Appeal (“FCA”) has now come to opposite conclusions in two decisions involving PC Bank and Amex points cards.

In its more recent decision in Amex, the FCA seems to have signalled that ITCs are not going to be available where the primary motivation is driving its own credit card business!

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TRAILING COMMISSIONS NO LONGER EXEMPT?

CRA REVERSES POSITION ON MUTUAL FUNDS TRAILING COMMISSIONS

For decades, mutual fund trailing commissions paid by mutual fund managers to licensed dealers — and by dealers to their agents — were generally treated as consideration for an exempt financial service and therefore not subject to GST/HST. In a GST/HST ruling released on December 22, 2025, however, the Canada Revenue Agency (“CRA”) reversed this longstanding administrative position. A subsequent February 10, 2026 GST/HST Notice confirms and details the CRA’s new position.

Under the revised approach, mutual fund trailing commissions will become taxable effective July 1, 2026. This change will have significant implications for fund managers, dealers, and other stakeholders in the mutual fund industry, and is expected to impose additional GST/HST compliance obligations and burdens.

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EXCISE WAREHOUSE TRANSFER RULES TIGHTEN

NEW CRA GUIDANCE LEADS TO INCREASED AUDIT ACTIVITY & MASSIVE ASSESSMENTS

In the Alcohol Industry, as with its heavily-taxed cousins – the tobacco, vaping, and cannabis industries – taxation is all about levying tax on producers at the time of final packaging, or on importers at the time of importation. There are exceptions, BUT only under heavily regulated and controlled circumstances.

Two of these exceptions are for transfers to Excise Warehouses owned by other Excise Licensees (“Licensees”), or transfers to Exporters. The Canada Revenue Agency (“CRA”) has recently been tightening its “documentation” requirements around these two types of transfers, auditing Licensees for compliance with those new requirements and issuing HUGE assessments (including 200% penalties) where even de minimis non-compliance is found.

In this Beer, Wine & Spirits Industry Report we examine these recent changes and the new landscape for the Canadian Alcohol Industry.

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MOVING ASSETS IN TAX DISPUTE? THINK AGAIN!

WHY TRANSFERRING ASSETS CAN MAKE A BAD SITUATION WORSE

When a taxpayer is assessed by the Canada Revenue Agency (“CRA”), the instinct to “do something” can be overwhelming. One of the most common reactions is to start moving assets to related parties – for example to spouses or children – in the hopes of keeping them out of the CRA’s reach while the tax dispute plays out.

A recent Tax Court of Canada ("TCC") decision shows why this instinct is a bad idea, and is a lesson for anyone trying to sidestep tax problems: what one does after the fact can often make things worse for all involved!

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LAWYERS REQUIRED IN MOST LARGE TAX APPEALS

TCC REVIEWS NEW TAX COURT RULES APPLYING TO GENERAL PROCEDURE CASES

In a remarkable decision rendered with a great deal of humility, and with great credit to the Tax Court Justice involved, the Tax Court of Canada (“TCC”) in Tanafranca v. The King (2025 TCC 169) has taken the opportunity to review recent changes to the manner in which large taxpayers may be represented in their Tax Court Appeals.

This case is a reminder for taxpayers that, in General Procedure cases, Experienced Tax Counsel will be required – and usually for good reason.

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CBSA INVESTIGATING OCTG FROM AUSTRIA!

DUMPING OF CERTAIN OIL & GAS WELL CASING FROM AUSTRIA

On February 2, 2026, 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 oil and gas well casing from Austria. This investigation was prompted by a joint complaint filed by a manufacturer in Alberta.

The goods under investigation are more specifically described as:

Oil and gas well casing and green tube casing, made of carbon or alloy steel, welded or seamless, heat-treated or not heat-treated, regardless of end finish, having an outside diameter from 4 ½” inches to 9 5/8” inches (114.3 mm to 245.2 mm), meeting or supplied to meet American Petroleum Institute (API) specification 5CT or equivalent and/or enhanced proprietary standards, in all grades, originating in or exported from the Republic of Austria.

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EMPLOYEE OR INDEPENDENT CONTRACTOR?

SIGNIFICANT TAX & LEGAL CONSEQUENCES COME WITH MISCLASSIFICATION

One area of Indirect Tax that is often underemphasized and underappreciated by businesses and tax professionals alike is the proper classification of employees and independent contractors. Canada’s rules generally mirror those in the United States, and in both jurisdictions, misclassification of a worker (i.e., classifying the worker as an independent contractor instead of an employee) can give rise to significant tax and legal consequences.

In this Report, we review the Canadian and U.S. rules, and the challenges businesses face in navigating this classification process.

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EXPIRY REVIEW: CHINESE SOLAR PANELS

CITT TO REVIEW ANTI-DUMPING DUTIES ON CHINESE PHOTOVOLTAIC MODULES/LAMINATES

On February 2, 2026, the Canadian International Trade Tribunal (“CITT”) announced that it is starting its expiry review (“Review”) on the dumping and subsidizing of photovoltaic modules and laminates (i.e., solar panels) from China. The CITT will use its Review to determine whether existing trade protections – in place since 2015 – will continue for another five years or be allowed to expire.

Below, we explain what this Review is, how it will work, and why those in the Canadian solar industry may wish to get involved.

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AUDIT INQUIRIES REQUIRE CAREFUL RESPONSES

THE STAKES ARE HIGH WHEN CRA REACHES OUT. DO NOT WAIT TO SEEK LEGAL HELP!

In the lifecycle of every large corporation, receiving an Audit inquiry from the Canada Revenue Agency (CRA) is not a matter of if, but when. Whether it arrives as a formal “Request for Information” or a polite introductory letter from an Auditor, this document acts as the first shot across the bow.

A business’s first response to an Audit inquiry has huge implications for the scope and duration of the ensuing Audit. It also carries implications for the taxpayer’s future liability for taxes, interest and potential penalties. In fact, at the very start of just about any kind of CRA inquiry, the stakes are often higher than most understand.

In this Tax Audits 101 Series Report, we discuss these initial Audit inquiries, why the stakes are so high, and why immediately seeking Experienced Tax Counsel can minimize negative consequences.

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CRA HOME "BUILDER" AUDITS USING MLS DATA!

THIRD-PARTY RESOURCES TAKING CRA AUDITS TO THE NEXT LEVEL

As we have previously written here, the Canada Revenue Agency (“CRA”) has significantly expanded its audit activity in the residential real estate sector – particularly targeting homeowners and renovators as “builders” for GST/HST purposes, triggering tax on the sale of homes following substantial renovation (and parallel income tax exposure).   In another troubling trend, CRA is now using third-party sources like MLS Listings to rebut taxpayer positions that these homes were intended as personal residences – often to great surprise and disappointment of the "builders".

Real Estate Audits & Use of Third-Party Sources

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CAN-US TRADE WAR TAKES TO SKIES

US TO DECERTIFY / CDN PLANES IN TIT-FOR-TAT

On January 29, 2026, President Trump escalated a long-simmering aerospace dispute into a major trade confrontation when he posted that the United States (“US”) will decertify the Bombardier Global Express – and ALL aircraft made in Canada(!) – until Canada certifies four Gulfstream models: the G500, G600, G700, and G800 models. The President also threatened 50% tariffs on Canadian aircraft imported into the US. While the White House has clarified that any actions would only apply to future US purchases, that would severely impact Canada’s large, (US) export-dependent aerospace industry.

In this Air & Aerospace Report, we dig into the background of this dispute and what it may mean for the North American aerospace industry moving forward.

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CITT FINDING: INDUSTRIAL STEEL WIRE

AD DUTIES ON STEEL WIRE FROM 10 COUNTRIES

On January 2, 2026, the Canadian International Trade Tribunal (“CITT”) announced its Finding in Inquiry NQ-2025-003 (the “Finding”), reporting that the dumping of certain carbon or alloy steel wire originating in or exported from China, Taiwan, India, Italy, Malaysia, Portugal, Spain, Thailand, Türkiye and Vietnam, with some exclusions (the “Subject Goods”), had caused injury to the domestic industry.

Specifically, certain Subject Goods for commercial distribution or industrial manufacturing (“Industrial Wire”) had caused injury to the domestic industry, while those packaged for retail sale to individual consumers for domestic use (not exceeding a weight of 1 kg per retail-ready package) had not and were not threatening to cause injury.

New Anti-Dumping Duties (“ADDs”) now apply to certain Industrial Wire imported into Canada and released after January 2, 2026.

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CITT FINDINGS: STEEL STRAPPING

ADDITIONAL DUTIES ON CHINA AND TÜRKIYE; NONE ON SOUTH KOREA OR VIETNAM

On January 14, 2026, the Canadian International Trade Tribunal (“CITT”) announced its Findings in Inquiry NQ-2025-005 (the “Findings”) reporting that the of dumping of certain steel strapping (the “Subject Goods”) originating in or exported from the People’s Republic of China (“China”) and the Republic of Türkiye (“Türkiye”) have caused injury to the domestic industry.  

New Anti-Dumping Duties (“ADDs”) now apply to certain Subject Goods imported into Canada and released after January 14, 2026.  See our previous report  for the CITT’s detailed description of the Subject Goods.

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CANADA'S THIRD-PARTY STEEL SURTAX

HIGH SURTAX RATES APPLY FOR STEEL IMPORTS ABOVE QUOTA LIMITS

As a follow up to our Steel Derivative Surtax Report here, over the recent Christmas holidays Canada also quietly amended the Surtax on the Importation of Certain Steel Goods (the “3P Steel Surtax”) and put in place a Remission Order for the same over the holiday period.

In this report, we report on the application of the 3P Steel Surtax, highlighting the tonnage tariff rate quota (“TRQ”) rules, import permit requirements, and relief available surtax exceptions and the Remission Order.

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SURTAX ON STEEL DERIVATIVE GOODS

BUSINESSES AND CONSUMERS TO FEEL FINANCIAL IMPACT OF NEW SURTAX

During the Christmas holiday season, the Federal Government of Canada quietly adjusted its trade policy QUITE significantly.  A significant development on this front is likely Canada’s enactment of the Steel Derivative Goods Surtax Order (the “Steel Derivative Surtax”) through an Order in Council.

We report below on the application of the Steel Derivative Surtax, and the particular goods targeted by these measures, and potential financial relief that may be available for businesses.