TCC: THE CRA CAN HAVE ITS CAKE AND EAT IT TOO!
TCC CONFIRMS THE CRA CAN TAX HOUSE FLIPS WHILE DENYING OFFSETTING ITCs
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When auditing many isolated residential real estate developments, the Canada Revenue Agency ("CRA") often insists on having its cake and eating it too: it assesses GST on the full selling price of a newly constructed home but denies the vendor every single Input Tax Credit ("ITC") on their selling costs.
CAN I KEEP MY TAX APPEAL CONFIDENTIAL?
FCA CONFIRMS THAT TAX COURT CAN SEAL DOCUMENTS AT DISCOVERY STAGE!
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When initiating complicated Tax Appeals, one of the questions that sophisticated clients often have (often unfortunately well into the process) is whether they can keep sensitive commercial documents “confidential”. That seems like a simple question, but it has a long and somewhat turgid answer involving the Open Court Principle and special rules in the Tax and Federal Courts for confidentiality-orders.
CHATBOTS ARE DANGEROUS FOR PRIVILEGE!
US COURT CONCLUDES USE OF AI IN LITIGATION MAY PUT PRIVILEGE AT RISK
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Canadian Courts are still trying to wrap their minds around AI and Solicitor-Client Privilege, with not a lot out there right now. The US appears to be on the forefront of this issue, however, with a District Court decision in United States v. Heppner (No. 25 Cr. 503, S.D.N.Y. 2026) (“Heppner”) highlighting the dangers of clients relying on AI for their legal analysis – or legal defences – without first engaging a dues paying lawyer.
GST/HST REVERSE CHARGE SYSTEMS
SENIOR FINANCE OFFICIALS SEEM TO CONFIRM MORE ON THE HORIZON
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Mid-summer, the Department of Finance released important new draft legislation, putting in place a “reverse charge system” to deal with fraud in the Telecom industry. More recently – at the Canadian Tax Foundation’s Inaugural Commodity Tax Symposium – senior officials seemed to have suggested that more could be coming to deal with similar issues in other industries.
REGISTERED BUT NOT REGISTERED!
CRA BUSINESS NUMBER TRAP: ACCOUNTS ASSIGNED DURING AUDIT NOT ENOUGH
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When the Canada Revenue Agency ("CRA") assesses an individual for unremitted GST/HST on a real property transaction, the agency typically creates an administrative business number to process the assessment. Many taxpayers assume that once the CRA opens this account and assesses tax, the taxpayer is officially GST "registered" and entitled to claim offsetting Input Tax Credits ("ITCs") on related expenses, for example real estate commissions.
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