Tax & Trade Blog

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INTERPRETATION ACT - FRIEND & FOE?

FCA RULING CONFIRMS INTERPRETATION ACT CUTS BOTH WAYS FOR TIME DEADLINES

A recent decision of the Federal Court of Appeal, Canada v. Csak, 2025 FCA 60, underscores that the federal Interpretation Act (the “Act”) rules concerning the computation of time for deadlines are complicated, and can both help and harm taxpayers depending on the circumstances.

Taxpayers will need legal advice to determine how the Act’s computation of time rules intersect with various deadlines under the Excise Tax Act (“ETA”) and other federal legislation.  How that intersection plays out may impact taxpayers’ rights.

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TAXATION OF THE INDIGENOUS: COMPLICATED!

MYRIAD OF CANADIAN TAX & DUTY LAWS & OUR INDIGENOUS PEOPLES

One of the more complicated areas of tax and trade law in Canada lies in the intersection of these rules with Canada’s Indigenous Peoples, and their historic rights under sections 87 to 89 of the Indian Act (“the Act”).  A recent case from the Canadian International Trade Tribunal (“CITT”) underscores that point in the context of import obligations.

The Indian Act & Customs Duties

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TARIFF WAR - ROUND 2

CANADA IMPOSES TARIFFS ON US STEEL AND ALUMINUM

The trade war between Canada and the United States (“US”) has taken a further turn for the worse. On March 12, 2025, President Trump imposed 25 percent tariffs on Canadian steel and aluminum products. Canada has now retaliated in kind, enacting the United States Surtax Order (Steel and Aluminum 2025) , which targets a wide list of US steel and aluminum products with a 25 percent surtax (the “Steel & Aluminum Surtax”). Businesses seeking to understand the scope of the Steel & Aluminum Surtax and mitigate its effects will require assistance from experienced International Trade counsel.

A Brief Review

President Trump, through an executive order on February 11, 2025, previously announced that 25 percent tariffs would be imposed on Canadian steel and aluminum products. 

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A SHOCK TO ONTARIO'S ELECTRICITY EXPORT TAX

PRESIDENT TRUMP VOWS TARIFF RESPONSE, ONTARIO SUSPENDS TAX

As we have previously written about here, there is suggestion that Ontario’s electricity export tax (the “export tax”) may lack constitutional authority to be imposed as a retaliatory measure to the United States’ (“US”) recent tariffs on Canadian goods.  Despite its questionable legality, Premier Ford imposed the export tax on March 10, 2025.  In response, President Trump indicated the US would increase its tariffs on Canadian steel and aluminum to 50 percent on March 12, 2025, which prompted Premier Ford to suspend the export tax shortly thereafter.

In this instance, it appears that Premier Ford’s export tax was a bad idea, much like we suggested here concerning Canada’s second round of retaliatory tariffs.  Accordingly, it might make little sense – both in economic theory and practical terms – to “enflame” the situation further with retaliatory measures when the US is an economic giant whose response can cripple the Canadian economy.

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TARIFF RELIEF 101

CANADA'S REMISSION PROCESS MAY LESSEN BURDEN FOR BUSINESSES

Despite the fact that President Trump agreed to a further moratorium on his Trump Tariffs on Canadian goods until April 2, 2025, Canada’s initial round of Retaliatory Tariffs STILL remains in effect! (?)

Businesses affected by Canada’s Retaliatory Tariffs are likely seeking relief from their financial effects and the Canadian government has outlined a remission process that may provide such relief. 

Understanding what a remission order is and how one can request remission from Canadian imposed tariffs may provide businesses with a financial lifeline in the current climate of a turbulent trade war.

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US CBP AUDITS TARGETING CANADIANS?

CANADIAN EXPORTERS SUBJECT TO US CBP REVIEW, AUDIT & INVESTIGATION!

Current US vs. Canada trade tensions may be extending into US Customs & Border Protection ("CBP") audit, review and investigative activities – at least as they relate to exports to the US from Canada.

Viewed from the US perspective, these are "imported goods", and are required to be imported to the US correctly.

We have seen an uptick in US CBP inquiries, audits, reviews and investigations of Canadian businesses selling into the US, and that should be raising an alarm for all Canadian exporters.

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ONTARIO'S ELECTRICITY EXPORT TAX

PREMIER FORD ANNOUNCES EXPORT TAX, BUT WILL IT BE LEGAL?

On March 4, 2025, Ontario’s Premier Doug Ford announced further a retaliatory measure to the recently announced Trump tariffs, indicating that Ontario would apply a tax on exports of electricity to the United States (“US”). While that announcement might make many Ontarians (and Canadians) feel good about "taking a stance", one wonders whether Ontario has the legal powers to do what it says it is going to do.

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TARIFF UPDATE 101

TRUMP TARIFFS, CANADA'S COUNTERMEASURES TAKE EFFECT

The trade dispute between the United States (“US”) and Canada has now entered a new phase, as the US imposed 25 percent tariffs on Canadian goods and 10 percent tariffs on Canadian energy products on March 4, 2025 .  Canada responded in kind and implemented the first phase of its previously announced retaliatory countermeasures through the United States Surtax Order (2025-1) .  The list of targetted US origin goods remains the same as the prior list , but for the addition of 14 new items under Chapters 98 and 99 of the Customs Tariff Schedule, although these new items appear to be absent from a news release published by the Department of Finance Canada.

In an interesting customs case continuing the Canada Border Service Agency’s (“CBSA”) assault on toy replica firearms, the Federal Court of Appeal (“FCA”) pointed out that allegations of bias leveled at the CBSA and the Canadian International Trade Tribunal (“CITT”) during the appeal process are serious and come with a “correspondingly heavy burden on the party alleging bias to prove the allegations”.  This is not good news for taxpayers and importers who often come to us feeling that the CBSA or the Canada Revenue Agency (“CRA”) has pre-judged their particular appeals, with the end-result in mind.

The trade relationship between the United States (“US”) and Canada received a brief period of reprieve with the recent 30-day postponement of President Trump’s blanket tariffs and Canada’s retaliatory countermeasures.  Despite this intermission, the US and Canada appear set to face off again with tariffs and other countermeasures, much like their counterparts on the ice in the nations face off. 

President Trump has shown a willingness to continue his strategy of cajoling Canada into trade concessions, as evidenced by his February 10, 2025, executive order imposing a 25% tariff on all steel and aluminum imports entering the US.  While there may be legitimate questions about the legality of such tariffs, in this dispute where the refs are off the ice the size of the US economy is a major advantage.

The 30-day moratorium on Trump’s and Canadian retaliatory tariffs should give Canadian importers and exporters some breathing room.  But that breathing room ought to be put to good use considering current duty minimization opportunities, with the future possible implementation of these tariffs in mind.  “Unbundling” is one technique for dealing with punitive tariffs and is reviewed here.

What is Unbundling?

While we are generalizing here, unbundling involves lawfully stripping away non-dutiable components from otherwise dutiable goods.  When goods are imported into a country, the value of those goods needs to be determined so that the proper amount of duty can be applied.  Both Canada and the United States (“US”) are parties to the General Agreement on Tariffs and Trade (the “GATT”) and employ a version of the GATT Valuation Code.  Under that code, the “transaction value” method is the primary system, and focusses on the “price paid or payable” for the imported goods, plus certain additions and less certain deductions.

As we have previously written here and here, a taxpayer’s debts can be imposed on their spouse or children through an assessment under section 160 of the Income Tax Act (“ITA”).  The Federal Court of Appeal has now drawn a line in the sand limiting the reach of such assessments with respect to the spouse of a tax debtor.

In Enns v. The King, 2025 FCA 14, the Court held that a survivor ceases to be the spouse of a deceased taxpayer for the purposes of section 160 of the ITA.  While the ruling is a win for survivors, it leaves open the question of how far the CRA’s assessment powers under section 160 may extend.

One of the more difficult things I have run into in my 35+ years of practice in customs, trade, and indirect tax, is navigating through extremely difficult to understand appeals processes, buried in multiple similar and parallel sections in the Customs Act (“Act”).

A recent case makes me think that I am not alone in this world (!), with the Canadian International Trade Tribunal (“CITT”) chastising the Canada Border Service Agency (“CBSA”) for misunderstanding and potentially misapplying the customs appeal processes.

The trade relationship between the United States (“US”) and Canada is facing renewed tensions as President Trump has reaffirmed that the US will impose a blanket 25 percent tariff on all Canadian goods, and is aiming to do this as soon as February 1, 2025.

In response, Canadian government officials have signaled Canada will respond with retaliatory tariffs and other possible countermeasures such as export taxes.  Consequently, it is important to understand how retaliatory import tariffs and export taxes have worked in the past, and how they might work in the future.

As we have written here and here, CRA is ALL over the Canadian real estate industry, assessing homebuyers, condo renters and everyone in between for GST/HST and income taxes related to use or sale of houses or condos on the suspicion of business or trading activities.

When using one’s home or other real estate holdings for business or trading purpose (CRA calls this an “adventure or concern in the nature of trade”), significant tax consequences can arise, as highlighted in CRA ruling from back in 2020, reviewed below.