Tax & Trade Blog

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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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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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EHT FOR "RELATED" EMPLOYERS

GETTING THE FULL EXEMPTION AMOUNT

Employer Health Tax (“EHT”) is a part of our overall Indirect Tax practice, and a common EHT question we get is whether two corporations are “associated employers” for the tax.  Being associated is problematic, as it essentially makes each employer pay more than if they were unrelated. 

While this may seem like a straightforward bedrock question (is "Aco" associated with "Bco"), there is some confusion as to how the technical rules apply (even, it appears, at the Ontario Ministry of Finance (“MOF”) – at least based on some recent Ontario assessment positions that we have seen). 

After 35 years of practice in Tax and Trade, one thing I am sure of is that there are no “magic” answers for dealing with administrative delay by the Canada Revenue Agency (“CRA”) or the Canada Border Services Agency (“CBSA”).  

A recent decision of the Canadian International Trade Tribunal (“CITT”) underscores this problem, and leaves taxpayers and importers in some potentially hard situations when faced by governmental inaction.

A couple of recent cases in the Federal Court of Appeal (“FCA”), which saw the taxpayer and importer, respectively, attempting to appeal earlier Court decisions, have emphasized that tax and trade litigation is a “one-shot deal”, where taxpayers (and importers on the trade side) are required to put their best foot forward in the lower Courts, and will be unlikely to get a second chance at making arguments before the FCA (or the lower Courts) if they do not do so.

Doostyar v. Canada

Doostyar v. Canada was a tax case, appealed to the FCA, in which the taxpayer’s position was that the Tax Court of Canada (“TCC”) erred by not accepting its additional submissions, post hearing.