Tax & Trade Blog

A common misconception when it comes to oil and gas trading with Canada is that, for GST/HST purposes, there will never be any obligations on foreign sellers selling on a DAP basis.* This is not true, and there can indeed by GST/HST collection and remittance obligations on US and international sellers, if certain conditions are met.

To understand why these misconceptions exist, one needs a deeper appreciation of the Canadian GST/HST legislation, found in Part IX of the Excise Tax Act(“ETA”), and also to get deep into the mindset of the Canada Revenue Agency (“CRA”), which administers the ETA and enforces GST/HST compliance.

Direct sellers in the US have a “safe harbour” which does not exist in Canada. Specifically, section 3508 of the US Internal Revenue Code expressly excludes the salesforce from the definition of “employee” for federal tax purposes! By contrast, direct sellers operating in Canada need to be proactive about making sure that the salesforce stays on the right side of the employee – independent contractor divide, which is a “common law” test in Canada.

The recent Tax Court of Canada (“TCC”) case of Mazraani provides a good refresher – and some positive comments for Canadian direct sellers – on the difference between employees and independent contractors.

An often-misunderstood aspect of the liquor industry by aspiring brewmasters and restauranteurs is the sheer number of regulatory steps required to import, manufacturer, distribute, and/or sell alcohol in Canada.  Complicating matters is the fact each province may have its own separate rules and licensing regimes.

This blog explores the various provincial licenses required to start an Ontario liquor business.

The Canadian tobacco industry is among the most highly and intensely regulated industries in the country – albeit largely policed by Provincial Governments. In Ontario, for example, regulation crosses all levels of the production, manufacturing and distribution process, starting with the actual farming of tobacco and ending with the final sales to the ultimate consumers of the products (i.e., smoking for their own consumption).

While many in the tobacco industry will be aware of the Ontario Ministry of Finance’s (“MOF”) involvement in assessing and auditing for tax at the wholesale distribution stage or monitoring tax compliance among Ontario retailers and convenience stores, the MOF’s audit activities actually start much sooner, and include audits and verification of tobacco farming activities.