Tax & Trade Blog

Since 1997, the Customs Act has imposed both mandatory payment and correction obligations on importers subject to Assessments.  In fact, if an importer wishes to challenge the Assessment, the only option is to first pay the assessed amount, and then request a review of the assessment – a system often referred to as “pay-to-play”.

As highlighted in the recent case of Skechers USA Canada, Inc. v. Canada Border Services Agency (2025 FCA 1) (“Skechers”), these obligations leave importers with limited options.  This means putting your best foot forward in a customs Compliance Verification is often the only practical way of dealing with a CBSA Assessment – often with the assistance of specialized legal advice.

In December 2023, the Supreme Court of Canada dismissed the Crown’s application for Leave to Appeal the Federal Court of Appeal (“FCA”) decision in Canada v. Dr. Kevin L. Davis Dentistry Professional Corporation 2023 FCA 76(“Davis”), leaving the FCA decision as the state of the law.  The FCA had upheld the Tax Court of Canada’s (“TCC”) judgment (2021 TCC 25) allowing Dr. Davis to claim input tax credits (“ITCs”) incurred in the course of suppling orthodontic appliances and services to patients.

Tax assessments are difficult to appeal in Canada because the Canada Revenue Agency (“CRA”) is allowed to make factual ‘assumptions’ which the taxpayer must disprove – or lose its case!

Two recent Federal Court of Appeal (FCA) decisions have seemingly expanded these powers to assumptions of “mixed fact and law” – although the second FCA seemingly walks back the first.