When you are a boutique Canadian law firm practising in a niche area like Indirect Tax, Customs and International Trade, AND you get multiple inquiries from multiple clients with the same problem, you KNOW something is up!
We have been getting a lot of recent inquiries about machinery being seized or held up at the Canadian border on the basis that it is “tobacco manufacturing equipment”.
Another question that we are often asked is what the CRA means by the term “carousel scheme”. It is a great question, because the CRA does not define its position on that phrase anywhere, other than in private assessment documents that it sometimes provides to GST registered persons on the wrong end of the CRA’s Notices of Assessment powers.
According to the CRA, and in its simplest form:
We are often asked about “accommodation invoices”, and what the CRA is talking about when speaking about these types of invoices.
This is predominantly a term that is used in the GST context but is not defined anywhere in the Excise Tax Act (i.e., the GST legislation) or relatively speaking anywhere in any published CRA administrative document.
But CRA does disclose what it means by “Accommodation Invoices” when it comes time to assess wary taxpayers:
An often-overlooked aspect of Canadian indirect tax is the degree to which provincial fuel and carbon tax statutes vary across the country — and the surprising and significant consequences for non-resident businesses with limited connections to Canada.
US and international petroleum traders selling fuel into Canada present a good example of the complexities in this area, and how the rules can vary substantially from province-to-province leading to unforeseen registration, licensing, and Fuel Tax collection requirements!
As we blogged about here, here and here, CRA continues to audit telecommunications businesses for possible sham and carousel transactions (i.e., GST fraud).
The alleged fraudulent activities come in many forms, and one auditing efforts seems focussed on suppliers and/or recipients connected to the Iris Technologies Inc. case, winding its way through the Tax Court of Canada (“Iris Technologies”).
Iris Technologies has been in the CRA’s gunsights for a number of years now, and allegedly involved in the fraudulent sale of long distance minutes to individuals and companies in Canada and abroad. CRA’s current focus appears to be on the allegedly fraudulent nature of these sales, seemingly taking the position that if Iris Technologies’ purchases and sales were sham transactions, then so too must be the suppliers and recipients transactions on the other side of Iris Technologies (i.e., those suppliers selling minutes to Iris, and those recipients purchasing minutes from Iris) – many (all?) of whom the CRA may be alleging are part of the same carousel schemes.
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