Tax & Trade Blog

Before 2010, Canadian direct selling companies were often organized as Unlimited Liability Companies ("ULCs"), for good reason.

The ULC structure could operate under the US "check-the-box" rules as a flow-through entity, which was often desirable from the perspective of the US corporate owner, which was usually structured as an S Corp or LLC.

Changes to the US-Canada Tax Treaty (the "Treaty") made effective in 2010 threw a wrench into these historically common structures – exposing some to a 25% unrecoverable tax under Part XIII of the Canadian Income Tax Act on any payments of dividends, interest, and royalties.

A recent Ontario Court of Appeal case serves as a reminder that legal jurisdiction clauses (also referred to as "forum selection") must use express language if they intend to provide a forum with exclusive jurisdiction to hear contractual disputes.

A recent decision of the Court of Appeal for Ontario (the “ONCA”) has created doubt as to the enforceability of certain arbitration clauses in independent contractor agreements – which will likely require all direct selling companies to want to review and retool their own clauses.

In Heller v. Uber Technologies Inc., 2019 ONCA 1 (“Heller”), an Ontario Uber driver commenced a proposed class action against Uber entities.  The Uber driver alleged that Ontario Uber drivers were improperly classified by Uber as independent contractors, when they were lawfully employees entitled to the protections of the Ontario Employment Standards Act, 2000 (the “ESA”). The class action sought a declaration that Uber had violated the provisions of the ESA and asked for $400 million in damages.

Every business operating in Québec should already be aware that it is a French-speaking province and that given the population it would make sense to operate in French when carrying on business in the province.

We are frequently asked, however, about the requirements of the Charter of the French Language (the “CFL”), particularly about whether specific documents must be translated, and whether websites must be offered in French as well.  

The December 20, 2017 decision of the Québec Court of Appeal in 156158 Canada Inc. v. Attorney General of Québec, 2017 QCCA 2055 provides a useful summary of the major provisions of the Charter of the French Language and upholds the validity of all of them, including the relatively recent requirement for French language websites.

On October 23, 2018, the Conservative-led Government of Ontario announced Bill 47, Making Ontario Open for Business Act, 2018. If Bill 47 passes, it would make a number of significant changes to the Employment Standards Act, 2000 and the Labour Relations Act, 1995, including repeals of many of the workplace reforms made last year by the then-Liberal government.