Tax & Trade Blog

The direct selling industry poses a number of unique challenges for Canadian sales tax regimes.  The patchwork of separate federal GST/HST and provincial PST/QST regimes only further complicate the matter, making it difficult for new entrants to the Canadian market to determine their collection, remittance, and reporting obligations.  This revised article from our 2023 primer provides a brief overview these optional sales tax rules.

As we blogged about here, experienced indirect tax practitioners will know to always check section 154 of the Excise Tax Act (“ETA”) when dealing with provincial taxes and to think about whether the that provincial tax is excluded from the “consideration” for the supply. If the provincial tax is not excluded, it means that GST will be applied on top of the provincial tax — in effect meaning there will be tax (GST) on the tax (provincial sales tax).

The most recent issue of the CRA Excise and GST/HST News explained how the GST applies on top of British Columbia’s Major Events Municipal and Regional District Tax ( “Major Events Tax” or “MET”) and serves as another example of this principle in practice.

As we blogged about here, in late 2022, Newfoundland and Labrador introduced a tax on sugar sweetened beverages (the “SSBT”).  An often-overlooked aspect of Canadian indirect and excise taxes is the ability for certain taxes to compound, so that one pays a “tax on a tax”.  This issue is particularly pronounced when supplies are subject to both GST/HST and a provincial excise tax.

A recent issue of the CRA Excise and GST/HST News clarified that the GST/HST is calculated on the total value of consideration including the SSBT and serves as an example of why it is important to consider how taxes interact in practice.

If you disagree with a decision made by the Canada Border Services Agency (CBSA) regarding imported goods, you may have the right to administratively appeal the decision under section 60 of the Customs Act. Recently, key CBSA administrative materials which govern this procedure were updated with the aim to “streamline” this process. The result contains both good and bad news for parties hoping to resolve disputes before escalating to further tribunals or courts.

The direct selling industry poses a number of unique challenges for Canadian sales tax regimes. The patchwork of separate federal GST/HST and provincial PST/QST regimes only further complicates the matter, making it difficult for new entrants to the Canadian market to determine their collection, remittance, and reporting obligations. This article provides a brief overview of the optional sales tax rules available to direct sellers.

An oft-forgotten point in Trade and Customs disputes is the lack of legal weight courts will give to CBSA Administrative Policies (i.e., D-Memos) which set out CBSA’s interpretation of customs laws and procedures.

The recent case in Entreprise Robert Thibert Inc., 2021 CanLII 122329 (CA CITT) (“Entreprise”) serves as a useful reminder for importers that there is real risk in relying on these policies, especially in the tariff classification context, even when the CBSA’s published administrative position appears to be clear and unambiguous.