Tax & Trade Blog

As we have previously reported on here and here, Canada has continued to expand its economic sanctions on Russian nationals, following Russia’s invasion of Ukraine, targeting individuals and entities believed to be linked to the Russian regime.

Canada’s sanctions have been primarily imposed under the Special Economic Measures (Russia) Regulations (the “Russia Regulations”), the Special Economic Measure Act (“SEMA”), and through other similar regulations targeting persons in Belarus, Ukraine and most recently Moldova.  In total these sanctions include asset freezes and financial prohibitions, and even apply to certain listed persons set out in the Schedules within the regulations.  These lists change frequently, are hard to get off of, and have impacted more than 2,900 individuals and entities.

The CBSA has historically requested password information from travelers in order to search their smartphones, personal computers and tablets, on the basis that these devices are searchable like all other “goods” coming into Canada.

The Ontario Court of Appeal in The King v. Pike (2024 ONCA 608) has determined, however, that the CBSA’s routine searches of such electronic devices is contrary to the Charter of Rights and Freedoms (the “Charter”) and is unconstitutional!

On July 18, 2024, the Canada Border Services Agency (“CBSA”) issued a Notice of Conclusion of its investigation in the ongoing Expiry Review of certain Carbon Steel Welded Pipe 1 (“CSWP-1”) originating in or exported from the People’s Republic of China (the “Subject Goods”).  

The CBSA determined that the expiry of the Canadian International Trade Tribunal’s (“CITT”) order dated March 28, 2019, in Expiry Review No. RR-2018-001 is likely to result in the continuation or resumption of (i) dumping of the Subject Goods and (ii) subsidizing of the Subject Goods.

More detail, including a full definition of the Subject Goods can be found in the Statement of Reasons for the determination.

Over the past several years, the Canada Revenue Agency (the “CRA”) has been in the midst of a digital service transformation.  Like the CBSA’s “CARM” project, which we previously discussed here, this initiative appears to be a response to the Canadian government’s “digital first” policy, which aims to build digital delivery into government operations and services.

While the CRA now provides Notices of Assessment electronically through online portals including “My Account” and “My Business Account”, access to such documents remains difficult for many, especially non-Canadian residents who may be unfamiliar with the Canadian tax system.

On August 12, 2024, the Canadian International Trade Tribunal (the “CITT”) issued a notice that it was beginning an expiry review in respect of certain Circular Copper Tube originating in or exported from the Federative Republic of Brazil, the Hellenic Republic (Greece), the People’s Republic of China, the Republic of Korea and the United Mexican States (Mexico) (the “Subject Goods”).  On August 13, 2024, the Canada Border Services Agency (the “CBSA”) similarly gave notice of the initiation of their parallel expiry review investigation.

More details on the technical definition of the Subject Goods can be found here.

On July 2, 2024, the Canadian International Trade Tribunal (the “CITT”) issued a preliminary determination of injury, concluding that there was evidence that the alleged dumping of certain concrete reinforcing bar from Bulgaria, Thailand and the UAE has caused material injury to the domestic industry.

Background Information

On May 6, 2024, following the initiation of an anti-dumping investigation by the Canada Border Services Agency (the “CBSA”), the CITT initiated a preliminary injury inquiry in respect of alleged dumping of concrete reinforcing bar, which we covered in a previous blog post. 

When a person (whether a corporation or natural individual) crosses a border to perform services, Canada and the US have detailed taxing rules, aimed at ensuring that the person entering the other country properly reports those activities.  These rules often come with mandatory “withholding taxes“ on the payer of the services resident in the country where the services are being performed.

Canada has recently fine-tuned its position on Regulation 105 withholding, which may come as a surprise to many involved in the cross-border provision of services.  

As we have blogged about here, in the world of “natural health products” (“NHPs”), the ability to import unlicensed products into Canada for personal use — colloquially known in the industry as “Not for Resale” (“NFR”) — is a hot topic for direct sellers.  Businesses need to understand the specific and narrow administrative policies which allow for these importations, so they do not draw the ire, and enforcement actions, of Health Canada!

When Canada Border Services Agency (“CBSA”) Officers have reason to believe that the proper procedures have not been followed at the border on the import of goods (i.e., an item has been concealed for reporting, or an incorrect value or description has been provided), the Officer has the power to either seize the good and sometimes the conveyance (i.e., vehicle) used to transport it, or issue an ascertained forfeiture after the fact.

Both actions may come as a surprise to the importer — especially given that even minor contraventions of the law can lead to these significant seizures and actions, thereby requiring detailed and confusing appeal processes to remedy.

Our tax system is complex, with many potential procedural pitfalls that taxpayers need to navigate.  One such issue is the jurisdictional boundaries between the Tax Court and the Federal Court for tax disputes.  Recent Supreme Court’s companion decisions in Dow Chemical Canada ULC v. Canada (“Dow Chemical”), and Iris Technologies Inc. v. Canada (“Iris”) provide clarifications on this issue.  However, these “clarifications” may result in a less streamlined and more costly process and thus may not be good news for taxpayers.

Recently we’ve noticed an uptick in the number of Canada Border Services Agency (“CBSA”) audits regarding the tariff classification of gloves (see our prior blog).  With its mid-year update, the CBSA has officially upgraded this focus to a Trade Compliance Verification Priority!

This marks the third time gloves have been a “verification priority” having previously been in the spotlight in 2017 and 2019.  The results from the first two rounds revealed that 82% of the 49 companies targeted were non-compliant, resulting in reclassification duties and penalties totalling over $2.6 million.

On June 27, 2024, the Canada Border Services Agency (“CBSA”) issued a notice that it will be conducting a re-investigation in respect of oil country tubular goods originating in or exported from Chinese Taipei, India, Indonesia, South Korea, Thailand, Türkiye and Vietnam (the "Subject Goods”).  This re-investigation falls under measure in force code OCTG2.  Detailed information, including the definition of the Subject Goods, can be found on the OCTG2 page.

Additionally, the CBSA has announced it will also update the surrogate normal values for certain seamless carbon and oil country tubular goods originating in or exported from China, under measure in force codes SC and OCTG1 respectively!

On June 20, 2024, the Canadian International Trade Tribunal (the “CITT”) issued a preliminary determination of injury, concluding that there was evidence that the alleged dumping and subsidizing of certain pea protein from China (the “Subject Goods”) has caused material injury to the domestic industry.

More details, including the definition of the Subject Goods and product inclusion can be found in the determination here.

On January 17, 2024, the Canada Border Services Agency (the “CBSA”) announced that it has initiated a re-investigation of the normal values and export prices in respect of certain gypsum board (known more colloquially as “drywall” or “wallboard”) originating in or exported from the United States (the “Subject Goods”) for use or consumption in Western Canada (i.e., BC, AB, SK, YU, and NT).

On June 20, 2024, the CBSA released a notice concluding the re-investigation with updated normal values and export prices.