Tax & Trade Blog

While Canadian businesses may have a 30-day reprieve from the threatened Trump and Canadian retaliatory tariffs, businesses should take the opportunity now to put plans in place to minimize the fallout should tariffs be enacted.  One avenue businesses can pursue to mitigate the impact of the tariffs is duty drawback.   

While President Trump’s Executive Order removes the option for American businesses to claim duty drawback, Canada Border Services Agency (“CBSA”) has confirmed that duty drawback remains available for Canadian businesses engaged in the import and subsequent export of goods, even if retaliatory tariffs come into force.

While the Trump tariffs have so far singled out allegedly unfair treatment of the US by Canada when it comes to border protection and the fentanyl crisis, the question remains if focus might shift to Canada’s supply management system.

A recent announcement from Canada Border Services Agency (“CBSA”) indicated Canada’s dry wheat quota had already been surpassed on January 12, mere weeks into the year.  This raises questions about the fairness of the tariff rate quota (“TRQ”) system for anyone but the largest Canadian importers who have the means to take advantage of it. 

Canada’s packaging and labelling laws are important for anyone selling or importing products for retail, and for consumers wishing to make informed choices about their purchases.  Navigating these laws can be difficult as they are often found in several places.  In this Report we will provide some examples of Canada’s diverse packaging and labelling laws.  

The Rules and Where to Find Them

The basic rules regarding product packaging and labelling in Canada can be found in the Consumer Packaging and Labelling Act, mandating that the following be present:

For frequent travelers between Canada and the United States, the opportunity to save time at the border and make use of the NEXUS entry process is alluring.  Applying for NEXUS is a labour-intensive process, and after submitting some applicants may be surprised to find their applications rejected.  Not all hope is lost, however.  In this Report we review appeal rights, and why specialized assistance will usually be required, if results are to be maximized.  

Why was my NEXUS application denied?

A couple of recent cases in the Federal Court of Appeal (“FCA”), which saw the taxpayer and importer, respectively, attempting to appeal earlier Court decisions, have emphasized that tax and trade litigation is a “one-shot deal”, where taxpayers (and importers on the trade side) are required to put their best foot forward in the lower Courts, and will be unlikely to get a second chance at making arguments before the FCA (or the lower Courts) if they do not do so.

Doostyar v. Canada

Doostyar v. Canada was a tax case, appealed to the FCA, in which the taxpayer’s position was that the Tax Court of Canada (“TCC”) erred by not accepting its additional submissions, post hearing.

As we blogged on here, the threatened Trump and Canadian retaliatory tariffs stand to have a serious impact on Canadian businesses.  Beyond the anticipatory steps we described previously that can be taken now, businesses should begin seriously considering their options for avoiding or recovering any retaliatory tariffs.

In this Report, we will review some of those options.

Tariff Exemptions

In compelling circumstances, it may be possible for a business to obtain an exemption from the retaliatory tariffs.  Exemptions may be available for businesses that can demonstrate they will be unduly harmed by the tariffs.  For example, if it can be established there are no viable alternatives in the supply chain for inputs required for goods that a business produces, an exemption may be made. 

While Canada was given a short reprieve yesterday from the tariffs threatened by US President, Donald J. Trump, President Trump appears to have doubled-down signalling that these 25% tariffs will be coming by February 1.  If this is to be believed, the days of US and Canadian weighted average tariffs in the 2.2-3.4% range are over, and Canadian businesses need to begin preparing for the challenges these sorts of significant tariffs will bring – including the likelihood of Canadian retaliatory measures, which we reported on here. 

In this Report will review basic preparation steps for “right now”.

As we blogged on here, CRA has recently taken steps to reverse what was generally understood to have been their historical position on employer eligible ITCs in pension plan situations involving insurance segregated fund products.

In a recent Excise News Publication, CRA doubles-down on this position in a very public way, seemingly setting the stage for audits in this area to come.