Tax & Trade Blog

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.

As we have written here and here, CRA is ALL over the Canadian real estate industry, assessing homebuyers, condo renters and everyone in between for GST/HST and income taxes related to use or sale of houses or condos on the suspicion of business or trading activities.

When using one’s home or other real estate holdings for business or trading purpose (CRA calls this an “adventure or concern in the nature of trade”), significant tax consequences can arise, as highlighted in CRA ruling from back in 2020, reviewed below.

On November 25, 2024, the Canadian International Trade Tribunal (the “CITT”) issued a notice that it was beginning an expiry review in respect of certain Aluminum Extrusions originating in or exported from the People’s Republic of China (the “Subject Goods”).  On November 26, 2024, the Canada Border Services Agency (the “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.

Canada’s “Luxury Tax” implemented under the Select Luxury Items Tax Act (“SLITA”) has been a significant development for vendors, importers and buyers of high-priced vehicles, aircraft and vessels.  As we have previously discussed here, the SLITA imposes tax obligations that require careful compliance, including registration and record keeping.

Recently, the CRA released a new guidance document clarifying how third-party rebates impact the calculation of tax owing under the SLITA.  The main message is straightforward but significant – rebates from manufacturers or other third parties do not reduce the taxable value of luxury items and do not lower the amount of tax vendors and importers must pay!

On November 25, 2024, the Canada Border Services Agency (the “CBSA”) announced that it has initiated an investigation into whether container chassis imported from Vietnam are circumventing Canada’s trade remedy measures on container chassis from China.

This marks Canada’s first anti-circumvention investigation!

What is an Anti-Circumvention Investigation

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.

Based on recent inquiries, it appears that the Canada Border Services Agency (the “CBSA”) is currently focusing on verifying whether importers are using the correct tariff classifications when reporting importations of various spices and seasoning products.

Importers of spices and seasoning products – and their foreign producers – should take any inquiries from CBSA seriously!

The Ontario Court of Appeal (the “OCA”) has recently upheld (Sims Professional Corporation v. Cooke, 2024 ONCA 388) a non-competition clause, and in the process confirmed several important points about the Court’s approach to reviewing such clauses. 

This is good news for the direct selling industry and signals that properly drafted non-compete clauses with independent contractors can be upheld in Canada.  However, each company’s clauses should be considered in the context of the Court’s approach, as enforceability can depend on the details. 

After more than 30 years, the Canada Revenue Agency (“CRA”) is revoking an administrative arrangement with the Canadian Dental Association that simplified claiming input tax credits (“ITCs”) for GST/HST registered dental practitioners who make both taxable zero-rated supplies (e.g., orthodontic appliances and cosmetic services) and tax-exempt supplies (e.g., dental and orthodontic services). 

Per CRA Notice 339, the CRA is revoking its administrative arrangement as it moves towards a stricter adherence to the rules in the Excise Tax Act (“ETA”) – likely requiring more detailed records. 

This shift appears to be a response to recent Court decisions holding that supplies of orthodontic appliances and orthodontic services are separate supplies – opening up the ability to claim ITCs (which we have written about here). 

The changes take effect beginning as early as January 1, 2025!

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.

On June 1, 2022, Quebec’s Bill 96 amended the Charter of the French Language (the “French Charter”) to include changes to the use of English trademarks on product packaging.  Effective June 1, 2025, a registered trademark is generally exempt from the French language requirements (meaning it does not have to be in French).

While this largely codifies existing jurisprudence, accompanying amendments to the Regulation respecting the language of commerce and business (the “Regulation Amendments”) will require additional French wording in some cases, also effective June 1, 2025.

On October 18, 2024, the Department of Finance launched its remission process to allow Canadian businesses to apply for relief or refund from surtaxes levied at Chinese products in an effort to level the playing field for Canadian businesses and workers.  Eligible Canadian businesses can apply to the Minister of Finance and present their plea on how the surtax policies have unduly burdened their business operations.

Businesses that request remission prior to November 8, 2024, will receive priority in application processing, while subsequent submissions will be processed thereafter in the usual course.

Over the past several months, Global Affairs Canada has been in the process of consultingwith Canadians on the operation of the Canada-United States-Mexico Agreement (“CUSMA” – also known in the US as the “USMCA”) ahead of the first joint review of the agreement set to take place in 2026.

As we have previously blogged about here, CUSMA is the current iteration in a history of “free trade” agreements between Canada, the United States and Mexico, and it includes built-in formal six-year joint reviews between its member nations to consider improvements and possible extensions. 

On October 16, 2024, the Canadian International Trade Tribunal (the “CITT”) announced an Order in Expiry Review RR-2023-007 (the “Order”), continuing its finding of material injury in respect of the dumping of Carbon Steel Welded Pipe originating in or exported from Pakistan, the Philippines, Türkiye (Turkey), and Vietnam (the “Subject Goods”). 

The Subject Goods

The Subject Goods are defined as:

As we have previously written about here and here, the Canada Border Services Agency (“CBSA”) has been in the process of rolling out their “CBSA Assessment and Revenue Management” (CARM) project. 

Despite recent concerns over more delays, the scheduled CARM cutover period is now underway and the full functionality of the CARM Client Portal is set to be released on October 21, 2024.

Global Affairs Canada (“GAC”) has announced it is now accepting applications for the 2025-year tariff rate quotas (the “TRQs”) for most dairy products (including cheese and ice cream), and poultry (including eggs).  Applications opened October 1, 2024, and the deadline to apply is November 15, 2024.

What is a TRQ?

On October 7, 2024, the Canadian International Trade Tribunal (the “CITT”) issued a notice that it was beginning an expiry review in respect of certain hot-rolled carbon steel plate and high-strength low-alloy steel plate originating in or exported from the Republic of Bulgaria, the Czech Republic and Romania (the “Subject Goods”).  On October 8, 2024, the Canada Border Services Agency (the “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.