Tax & Trade Blog

---

NEW CRA GUIDANCE ON PROVINCE OF SUPPLY

CRA’S POLICIES ON PROVINCE OF SUPPLY RULES NOW FOUND IN NEW D-MEMO SERIES

Download a PDF copy of this Blog here.

Determining the province in which a supply occurs is a fundamental requirement for GST/HST compliance, because it dictates the applicable tax rate: 5% GST, 13% GST/HST in Ontario, 14% GST/HST in Nova Scotia, or 15% GST/HST in the remaining Atlantic provinces.

The rules for determining the provincial place of supply have not changed, but the Canada Revenue Agency (“CRA”) recently updated its applicable published guidance on these rules, meaning there are now new sources to be consulted when dealing with these issues.

---

DIRECTORS’ LIABILITY FOR UNREMITTED GST/HST

RESIGNING AS DIRECTOR TO AVOID CORPORATE INDIRECT TAX LIABILITY A TRICKY TASK

Download a PDF copy of this Blog here.

The GST/HST framework under the Excise Tax Act (“ETA”), as with other indirect tax regimes (like federal and provincial alcohol, tobacco and vaping taxes) includes “directors’ liability” provisions that are triggered when the corporation does not have the money to pay an assessed amount. Most of these systems have “statutory limitation rules” and “due diligence defences” which may limit liability, but these rules are extremely tricky to apply in practice.

We review these in a two-part series here, with reference to the helpful recent case Stevens v. The King, 2026 TCC 76 (“Stevens”), which revolves around this directors’ liability framework.

---

THE DUE DILIGENCE DEFENCE & DIRECTORS’ LIABILITY

PROVING DUE DILIGENCE TO AVOID DIRECTORS’ GST/HST LIABILITY NO EASY FEAT!

Download a PDF copy of this Blog here.

The GST/HST framework under the Excise Tax Act (“ETA”), as with other indirect tax regimes (like federal and provincial alcohol, tobacco and vaping taxes) includes “directors’ liability” provisions that are triggered when the corporation does not have the money to pay an assessed amount. Most of these systems have “due diligence defences” and “statutory limitation rules” which may limit a director’s liability, but these rules are tricky to apply in practice.

We review these rules in a two-part series, with reference to the recent case Stevens v. The King, 2026 TCC 76 (“Stevens”), which revolves around this directors’ liability framework.

---

UNCLAIMED GST ITCs ALLOWED ON REASSESSMENT

TCC CONFIRMS CRA MUST ACCOUNT FOR UNCLAIMED CARRIED-FORWARD ITCs

Download a PDF copy of this Blog here.

In a long-running GST/HST issue, the question has been whether the Minister’s obligation to “audit to net tax” requires CRA to take into account ALL unclaimed Input Tax Credits (“ITCs”) carried forward to a particular reporting period under audit. In the past, CRA maintained that its obligation under section 296(2) of the Excise Tax Act (“ETA”) only required it to allow unclaimed ITCs for the particular reporting period under audit and not any that may have then remained unclaimed from prior periods.

In a seismic decision of Justice Visser of the Tax Court of Canada ("TCC"), the TCC has now answered that question in favour of all Canadian GST registrants — a decision which we review below.

---

WILFUL BLINDNESS: SAME AS ACTUAL KNOWLEDGE

TO TAXPAYER'S CHAGRIN, "SHOULD HAVE KNOWN" SAME AS KNOWLEDGE

Download a PDF copy of this Blog here.

In over 35 years of tax practice, we have had more than a few inquiries from taxpayers facing CRA Audits and Assessments maintaining that they did not actually know they were non-compliant with their tax obligations. The doctrine of “wilful blindness” is something that these taxpayers would have benefitted from understanding: that is the ability that Canada Revenue Agency (“CRA”) and the Tax Court of Canada (“TCC”) have to equate “knowledge” with “information that the taxpayer should have known but was perhaps ‘wilfully blind’ to”.

In this Tax Audit Series Report, we discuss the doctrine of “wilful blindness” and a recent TCC decision that upheld some $1.3 million in penalties and interest, on the basis that the taxpayer was wilfully blind to his tax non-compliance.