Tax & Trade Blog

Quebec’s controversial Bill 96, officially titled “An Act respecting French, the official and common language of Quebec” (“Act”), was passed in 2022. Bill 96 amends the Charter of the French Language (“Charter”) to try and ensure that French remains the predominant language in commercial activities within Quebec. Practically speaking, Bill 96 has made things extremely complicated for any English-based Canadian or US business trying to operate in Quebec, including both Canadian and US Direct Sellers.

On September 28, 2023, Health Canada launched the Canadian Product Safety Pledge (the “Safety Pledge”) – a voluntary compliance initiative aimed at increasing product safety with respect to consumer products and cosmetics available to Canadians online. 

The Safety Pledge consists of 14 voluntary commitments concerning protective and corrective actions that Health Canada has indicated are grouped into four categories :

1. Detection and prevention of the sale of unsafe products;
2. Cooperation with Health Canada;
3. Raising of product safety awareness amongst sellers; and
4. Empowerment of consumers on product safety issues.

A common theme of our direct selling blogs is that direct selling businesses should pay close attention to the wording of their key documents (compensation plans, contracts, and policies and procedures, etc.) to ensure that plan participants are properly characterized as independent contractors and not as employees.

While not in a direct selling context, a recent decision at the Tax Court of Canada serves as a cautionary tale for businesses that fail to examine the details of their documents – their workers may be characterized contrary to their intentions!

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.