Tax & Trade Blog

In an interesting customs case continuing the Canada Border Service Agency’s (“CBSA”) assault on toy replica firearms, the Federal Court of Appeal (“FCA”) pointed out that allegations of bias leveled at the CBSA and the Canadian International Trade Tribunal (“CITT”) during the appeal process are serious and come with a “correspondingly heavy burden on the party alleging bias to prove the allegations”.  This is not good news for taxpayers and importers who often come to us feeling that the CBSA or the Canada Revenue Agency (“CRA”) has pre-judged their particular appeals, with the end-result in mind.

The trade relationship between the United States (“US”) and Canada received a brief period of reprieve with the recent 30-day postponement of President Trump’s blanket tariffs and Canada’s retaliatory countermeasures.  Despite this intermission, the US and Canada appear set to face off again with tariffs and other countermeasures, much like their counterparts on the ice in the nations face off. 

President Trump has shown a willingness to continue his strategy of cajoling Canada into trade concessions, as evidenced by his February 10, 2025, executive order imposing a 25% tariff on all steel and aluminum imports entering the US.  While there may be legitimate questions about the legality of such tariffs, in this dispute where the refs are off the ice the size of the US economy is a major advantage.

The 30-day moratorium on Trump’s and Canadian retaliatory tariffs should give Canadian importers and exporters some breathing room.  But that breathing room ought to be put to good use considering current duty minimization opportunities, with the future possible implementation of these tariffs in mind.  “Unbundling” is one technique for dealing with punitive tariffs and is reviewed here.

What is Unbundling?

While we are generalizing here, unbundling involves lawfully stripping away non-dutiable components from otherwise dutiable goods.  When goods are imported into a country, the value of those goods needs to be determined so that the proper amount of duty can be applied.  Both Canada and the United States (“US”) are parties to the General Agreement on Tariffs and Trade (the “GATT”) and employ a version of the GATT Valuation Code.  Under that code, the “transaction value” method is the primary system, and focusses on the “price paid or payable” for the imported goods, plus certain additions and less certain deductions.

As we have previously written here and here, a taxpayer’s debts can be imposed on their spouse or children through an assessment under section 160 of the Income Tax Act (“ITA”).  The Federal Court of Appeal has now drawn a line in the sand limiting the reach of such assessments with respect to the spouse of a tax debtor.

In Enns v. The King, 2025 FCA 14, the Court held that a survivor ceases to be the spouse of a deceased taxpayer for the purposes of section 160 of the ITA.  While the ruling is a win for survivors, it leaves open the question of how far the CRA’s assessment powers under section 160 may extend.

One of the more difficult things I have run into in my 35+ years of practice in customs, trade, and indirect tax, is navigating through extremely difficult to understand appeals processes, buried in multiple similar and parallel sections in the Customs Act (“Act”).

A recent case makes me think that I am not alone in this world (!), with the Canadian International Trade Tribunal (“CITT”) chastising the Canada Border Service Agency (“CBSA”) for misunderstanding and potentially misapplying the customs appeal processes.

The trade relationship between the United States (“US”) and Canada is facing renewed tensions as President Trump has reaffirmed that the US will impose a blanket 25 percent tariff on all Canadian goods, and is aiming to do this as soon as February 1, 2025.

In response, Canadian government officials have signaled Canada will respond with retaliatory tariffs and other possible countermeasures such as export taxes.  Consequently, it is important to understand how retaliatory import tariffs and export taxes have worked in the past, and how they might work in the future.

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.