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 4th with the energy of a lead balloon. Yes, 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.
CBSA AUDITING STRUCTURAL STEEL
CBSA'S ONGOING SCRUTINY IN STEEL PRODUCTS CLASSIFICATION SIGNALS RISING COMPLIANCE RISK
As we have blogged here and here, the Canada Border Services Agency (the “CBSA”) sets out its priority areas for compliance audits and verifications in its Trade Compliance Verification Priorities publication. Steel and metal products have long been among the CBSA’s primary focuses for compliance review.
Recently, the CBSA has intensified its challenges to the classification of steel containers, interpreting tariff headings in ways that go beyond prevailing industry practice. This shift reflects a broader trend toward more aggressive enforcement in the steel sector.
For importers, this trend heightens compliance risk. The best approach is to seek legal advice early in the audit process and resolve classification issues before they escalate into formal assessments.
NEW HOUSING REBATE FOR BUILDERS
TCC LOWERS THE BAR FOR "OCCUPATION AS A PLACE OF RESIDENCE"
As we have blogged here and here, homeowners who sell their newly built homes shortly after taking possession have long been a target of CRA audits. When these homeowners also claim the GST/HST New Housing Rebate, the CRA reviews their claims closely.
A key issue in these New Housing Rebate claims is whether the homebuyers occupied the property as a place of residence after completion of construction. In the past, courts have applied a stringent standard in interpreting what constitutes “occupation as a place of residence”.
In a recent decision, Sharma v. The King (2025 TCC 145), the Tax Court of Canada (“TCC”) lowered the bar for establishing “occupation as a place of residence”, signalling an attenuated interpretation that favours taxpayers.
NFR CHALLENGES UNDER CARM
CBSA'S NEW CARM PROGRAM CREATING BIG PROBLEMS FOR NFR STRUCTURES
Canada Customs’s new electronic portal, implemented in October 2024 as part of the Canada Border Services Agency (“CBSA”) Assessment and Revenue Management (“CARM”) system, is throwing up significant challenges for direct sellers trying to ship products into Canada under a personal importation basis.
Specifically, CARM is now effectively requiring all non-resident direct sellers to register as importers and denying their access to easy courier shipments.
The focal point for any of these direct sellers will now be (1) becoming entrenched in the Canadian marketplace, and (2) having all of their dietary supplement products formally registered as Natural Health Products (“NHPs”) with Health Canada.
CANNABIS CHARGES & EXCISE FINES
CONTRAVENING CANNABIS LAWS CAN INVOLVE TWO SEPARATE FIGHTS
The legalization of most cannabis sales in Canada comes with a number of statutes and regulations, and a detailed set of enforcement rules for those trying to operate outside the system.
Everyone knows that breaking the laws governing cannabis can lead to criminal penalties. A less well known, but very serious, consequence of noncompliance is the potential for large fines under the Excise Act(“EA”). One Canadian found this out the hard way in a recent Saskatchewan Court of Appeal (“SKA”) case.
FORCED LABOUR REPORTING MADE EASIER
CANADA ADOPTS NEW GLOBAL TEMPLATE FOR ANNUAL FORCED LABOUR REPORTING REQUIREMENTS
Canada has in place now, for the last two years, a comprehensive set of legal reporting requirements for companies with supply chains that may be susceptible to products made through forced labour or child labour.
We have previously written on the reporting requirements and the reporting entity conditions here and here.
This report reviews the new global template that Canada has adopted to make this reporting process easier.
BORDER INFRACTION CONSEQUENCES
IMMIGRATION STATUS ISSUES MAKE APPEALS A NO BRAINER
While the consequences of border infractions, either under the Customs Act (“CA”) or Proceeds of Crime (Money Laundering) and Terrorist Financing Act (“PCMLTFA”), are generally not that severe, the situation may be very different for non-citizens of Canada.
Depending on how an infraction is handled by the CBSA—and what is disclosed on immigration or citizenship applications—infractions linked to the CA and PCMLTFA can trigger inadmissibility under the Immigration and Refugee Protection Act (IRPA) or prohibitions under the Citizenship Act. Consequently, as a preventative measure, non-citizens should appeal border infractions under the relevant legislation to head off any potential quasi-criminal prosecutions and protect their status in Canada.
RIGID RULES GOVERN CANNABIS AT THE BORDER
CBD PRODUCTS WHILE LEGAL, REMAIN TIGHTLY CONTROLLED FOR IMPORT/EXPORT
Since the Trudeau government largely decriminalized CBD and cannabis products in 2018, there has been a proliferation of both distribution and retail in this industry – but not all legal.
The legalization of CBD and cannabis products also comes with highly complex and difficult regulations which can lead to both civil and criminal enforcement where they are not strictly followed.
In a recent case, an unfortunate Ontario resident found this out, and also learned the extent to which CBSA and RCMP work together in these matters.
CANADA'S BANDAID APPROACH TO TARIFFS
EXTENSION OF REMISSION SHOULD BE REPLACED BY REMOVAL OF ALL TARIFFS
While Prime Minister Carney was recently quoted saying there will be no tariffs imposed on US imports, Canada’s remaining tariffs (technically “surtaxes”) on US steel and aluminum and some automotive goods continue to be source of significant economy pain for the remaining industrial businesses left in Canada’s economy.
Even with the recent announcement from the Department of Finance Canada (“DOF”) that remission relief from the tariffs will be extended an additional two months and enhanced, the best course of action in the circumstances would be to tear the “bandaid” right off and eliminate ALL retaliatory tariffs in one fell-swoop.
PROVISIONAL DUTIES ON CAST IRON SOIL PIPE
CBSA IMPOSES PROVISIONAL DUTIES ON CAST IRON SOIL PIPE FROM CHINA
On October 9, 2025, the Canada Border Services Agency (“CBSA”) released a notice of its preliminary determination of dumping in respect cast iron soil pipe originating in or exported from the People’s Republic of China (the “Subject Goods”).
Provisional duties are now imposed on imports of the Subject Goods released from the CBSA on or after October 9, 2025!
A NEW LOOK AT GST/HST HOUSING REBATES
"FRUSTRATION" IN CRA HOME REBATE ASSESSMENTS
Federal tax legislation in Canada encourages the construction and renovation of residential homes through a range of tax rebates. However, eligibility for these rebates is not always clear-cut.
In the recent case at the Tax Court of Canada (“TCC”) – Osagie v. The King, 2025 TCC 114 – the Court concluded that a homeowner was eligible to claim a GST/HST “new housing rebate” without satisfying all legislated conditions. This decision suggests that eligibility for GST/HST housing rebates may be broader than previously thought.
ONTARIO FUEL TAXES: A MINEFIELD!
HIDDEN PITFALLS FOR FUEL DISTRIBUTORS IN CANADA
Companies in the business of importing or dealing in fuels in Canada quickly learn that the required registrations can be a maze of red tape. Each province has its own playbook, and for Ontario in particular, the rules can be uniquely complicated.
What businesses need to know is that going at it alone comes with risks.
Some of the licensing statutes are downright antiquated and taking steps that may seem compliant can still open the door to other major exposures.
RENEWED DUMPING DUTIES ON ALUMINUM EXTRUSIONS
CITT GRANTED NEW EXCLUSIONS FOR SIX PRODUCTS FROM CHINA!
On October 1, 2025, the Canadian International Trade Tribunal (the “CITT”) announced an Order in Expiry Review RR-2024-007 (the “Order”), continuing its finding of material injury in respect of the dumping of Aluminum Extrusions originating in or exported from the People’s Republic of China (the “Subject Goods”).
The Order also added new exclusions for six aluminum extrusion products (the “New Exclusions”).
CANADA OPENS 2026 TRQ APPLICATIONS
APPLICATIONS PERIOD FOR DAIRY AND POULTRY RUNS UNTIL NOVEMBER 15, 2025
Global Affairs Canada (“GAC”) recently announced it is now accepting applications for the 2026 tariff rate quotas (the “TRQs”) for most dairy products (including cheese, butter and ice cream), and poultry (including eggs). Applications opened on October 1, 2025, and the deadline to apply is November 15, 2025.
What is a TRQ?
RECENT TAX COURT CASES ON ISC BUSINESS EXPENSES
THE FIRST HURDLE: PROVING YOU ARE CARRYING ON A BUSINESS!
The Canada Revenue Agency (the “CRA”) continues to scrutinize business expenses claimed by taxpayers, particularly where business losses are involved. These audits can impact Independent Sales Contractors (“ISCs”) of direct selling companies.
While ISCs are responsible for claiming their own business expenses, the CRA may go further than auditing expenses and can also question whether the ISC is really “carrying on business” at all. Two recent Tax Court of Canada (“TCC”) decisions in the direct selling space demonstrate the tests the TCC applies.
EXPIRY REVIEW TERMINATED: STEEL PLATE
CITT ENDS ANTI DUMPING DUTIES ON STEEL PLATE FROM UKRAINE
On September 18, 2025, the Canadian International Trade Tribunal (the “CITT”) announced an Order in Expiry Review RR-2025-003 . However, the CITT terminated its expiry review and cancelled its former order concerning the dumping of hot-rolled carbon steel plate and high-strength low-alloy steel plate with certain specifications originating in or exported from Ukraine excluding universal mill plate, plate for use in the manufacture of pipe and plate having a rolled, raised figure at regular intervals on the surface (also known as floor plate) (the “Subject Goods”).
More detail, including the full definition of the Subject Goods, can be found in the Order.
NEW GST VOLUNTARY DISCLOSURE GUIDELINES!
UPDATED CRA VD PROGRAM GUIDELINES NOW IN EFFECT
On September 9, 2025, the Canada Revenue Agency (“CRA”) released GST/HST Memorandum 16-5-1 introducing major changes to its Voluntary Disclosure Program (“VDP”) in GST/HST matters (the “GST/HST VDP”), alongside IC00-1R7 – Voluntary Disclosure Programwhich outlines equally meaningful revisions to the income tax VDP.
This is the first update to the VDP since 2018 (which we wrote about back then here), and the changes appear aimed at encouraging more taxpayers to come forward and correct errors or omissions in their tax affairs (perhaps a result of less than anticipated take-up of the VDP program in recent years). The new rules took effect Oct 1, 2025.
LONG-ARM OF CRA COLLECTIONS
CRA FOLLOWS HUSBAND'S TAX DEBT TO WIFE
As we have blogged here and here, the CRA has “third-party” transfer powers that allow it to follow a taxpayer’s GST or income tax debts to relatives where it can demonstrate that money or assets have been diverted to those relatives, for less than fair market value.
A better alternative would be dealing with one's tax debts during one's lifetime, and using the CRA’s newly revamped Voluntary Disclosure Program to help settle one’s tax affairs finally and effectively.
The Tax Court of Canada's (“TCC”) recent decision Ballantyne v. The King (2025 TCC 127) underscores the mess that can be created for a spouse or children if tax debts remain unaddressed.
PROVISIONAL DUTIES ON STEEL STRAPPING
CBSA IMPOSES PROVISIONAL DUTIES ON CHINA, SOUTH KOREA, TURKEY, AND VIETNAM
On September 16, 2025, the Canada Border Services Agency (“CBSA”) released a notice of its preliminary determination of dumping in respect steel strapping originating in or exported from China, South Korea, Türkiye (Turkey), and Vietnam, and the subsidizing of steel strapping from China (the “Subject Goods”).
Provisional duties are now imposed on imports of the Subject Goods released from the CBSA on or after September 16, 2025!
EXPIRY REVIEW: STEEL SHEET 2
CITT REVIEWING ANTI-DUMPING DUTIES ON STEEL SHEET FROM TURKIYE & VIETNAM
On September 9, 2025, the Canadian International Trade Tribunal (the “CITT”) issued a noticethat it was beginning an expiry review in respect of corrosion-resistant steel sheet 2 originating in or exported from the Republic of Türkiye and the Socialist Republic of Vietnam (the “Subject Goods”). On September 10, 2025, the Canada Border Services Agency (“CBSA”) similarly gave notice of the initiation of their parallel expiry review investigation.
More details on the technical definition of the Subject Goods can be found here.
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