Tax & Trade Blog

As we have blogged here and here, dealing with and appealing Director’s Liability Assessments for GST/HST purposes or source withholding purposes on the Income Tax side is generally an uphill battle. 

The Tax Court’s recent decision in Donaldson v. The King (2022 TCC 159) underscores that a corporation dealing with business down-turns by holding off on paying the CRA its required remittances is a losing strategy!

A T4A slip is an essential Canadian tax form that businesses must issue to contractors and other self-employed individuals when payments are made for services rendered within Canada.

For Direct Selling businesses, properly issuing T4A slips and understanding withholding requirements are crucial for ensuring smooth, efficient operations and compliance with the Canada Revenue Agency (“CRA”).

The Digital Services Tax (“DST”) has come into force in Canada!  It was enacted in the Digital Services Tax Act (Bill C-59)  (the “Act”) and came into effect with an order-in-council issued on June 28, 2024, and with effect to January 1, 2024 – targeting large Canadian and non-Canadian businesses generating revenue from
“in-scope” digital services.

In short, this is a potential significant piece of taxing legislation, with potential retroactive effect to January 1, 2022, requiring major digital entities like Netflix, Amazon Prime, and Spotify to pay a 3% annual tax on digital services revenue attributable to Canadian customers.

Global Affairs Canada (“GAC”) recently announced the opening of the tariff-rate quota (the “TRQ”) application period for the 2024-2025 dairy year, which is open from May 1, 2024, to June 15, 2024.  We previously talked about the TRQ application process; however, this year’s announcement also comes with changes flowing from New Zealand’s successful challenge of Canada’s dairy TRQ policies.

The Canadian government can and does impose sanctions against foreign States and non-state entities through a complex formula involving several different Acts and regulation sets.  Navigating through this myriad of rules can be daunting.

Overview of Canada’s Sanctions Regime

Global Affairs Canada is the overall regulator of Canadian sanctions, and has just released some long-awaited clarifications on the scope of Canada’s current sanctions, which comes in response to the Canadian Senate’s 2023 Standing Committee Report on Foreign Affairs and International Trade. 

The recent decision of the Tax Court of Canada (“TCC”) in Refind Environment Inc. v. The King (2024 TCC 2) is a poignant reminder of the importance of filing deadlines.

In Refind, the TCC dismissed an application for an extension of time to file a Notice of Objection against assessments under the Excise Tax Act (“ETA”) because the Registrant was one (1) day late in filing their application for an extension of time to the Minister of National Revenue (the “Minister”)!

On August 21, 2023, the Canadian International Trade Tribunal (“CITT”) announced an Expiry Review of its finding made on October 15, 2018, in Expiry Review RR-2017-005, continuing its finding made on December 11, 2012, in Inquiry No. NQ-2012-003 in respect of Carbon Steel Welded Pipe exported from Chinese Taipei, the Republic of India, the Sultanate of Oman, the Republic of Korea, the Kingdom of Thailand and the United Arab Emirates.

On January 23, 2024, the CITT released a Revised Notice of Expiry Review RR-2023-003, updating certain elements of the Expiry Review Schedule.  Relevant Questionnaires have also been posted.

If there was such a thing as a “10-Alarm” fire, CRA’s public release of GST Interpretation RITS 202403 would seem to fit that bill.

In this April 2023 Interpretation – issued only a few weeks ago – CRA takes the view that Employers with pension funds invested in an insurer’s segregated funds, are NOT eligible to claim ITCs for the GST/HST payable on the investment management fees (“IM Fees”) paid directly out of those funds.

On one level of analysis, CRA has done an about-face and reversed a prior 2012 Ruling in this area (which seemed to have addressed the same situation).  While CRA may disagree with that statement, this does appear to be a potentially significant “reinterpretation”.