Tax & Trade Blog

When a specialty tax practice like our own, focussed on GST/HST and other indirect taxes, sees a plethora of inquiries from homeowners being either assessed by the Canada Revenue Agency (“CRA”) on the sale of their homes, or threatened with such assessments, we know that something is up!

As we have previously written, the CRA continues targeting residential homeowners. Specifically, those who have sold their home in a short period of time after: (1) substantially renovating; or (2) commissioning the construction of a new home for their own use.

On May 13, 2024, the Canadian International Trade Tribunal (“CITT”) issued a notice that it was beginning an expiry review in respect of unitized wall modules originating in or exported from the People’s Republic of China (“Subject Goods”).  On May 14, 2024, the Canada Border Services Agency (“CBSA”) similarly gave notice of the initiation of their parallel expiry review investigation.

The Subject Goods are defined as follows:

As we wrote here, Canada’s rules taxing Vaping Products were first enacted in 2018, with the Tobacco and Vaping Products Act (“TVPA”), continue to involve, with a number of provinces and territories now getting into the taxing game.  While the TVPA sets out a regulatory framework for manufacturers, importers, retailers and any other business involved in the vaping industry, the provincial rules center largely on ensuring their allocation of the taxes from this new found source of tax income!

The Canada Revenue Agency (“CRA”) has recently released some new Guidance on how all of these taxes are supposed to work together, but the policy goal of this (i.e., taxing something that in many eyes is meant to be an alternative to an incredibly-bad-for-your-health smoking habit) remains suspect.

On May 3, 2024, the Canada Border Services Agency (“CBSA”) issued a Notice of Initiation of Investigation under the Special Import Measures Act (“SIMA”) in respect of the alleged dumping of certain concrete reinforcing bar from Bulgaria, Thailand and the UAE.  This investigation was prompted by a joint complaint filed by three steel manufacturers.

The goods under investigation are more specifically described as:

Businesses engaged exclusively in commercial activities get full input tax credits (“ITCs”) enabling them to recover all the GST/HST they pay in the course of their business activities.  Organizations engaged exclusively in “exempt” activities (financial services, healthcare, educational-related institutions) get no ITCs, meaning that GST/HST is a hard cost in their business. 

In between the two are businesses that carry on BOTH commercial and exempt activities, and in order to determine the ITCs these businesses are eligible to claim, a “fair and reasonable” allocation method has to be used.  A recent decision of the Tax Court of Canada (the “TCC”) in Marine Atlantic Inc. v. The King (2023 TCC 95) explores what that really means.

Global Affairs Canada (“GAC”) recently announced the opening of the tariff-rate quota (the “TRQ”) application period for the 2024-2025 dairy year, which is open from May 1, 2024, to June 15, 2024.  We previously talked about the TRQ application process; however, this year’s announcement also comes with changes flowing from New Zealand’s successful challenge of Canada’s dairy TRQ policies.

As announced in the Liberal-NDO Coalition Government’s 2024 Budget, and at a time when the government seems hard-pressed to increase taxation in Canada to deal with the massive spending over the last few years, the Canada Revenue Agency (“CRA”) has been given some brand new tax Audit powers – which to some respects are downright frightening.

The Canadian government can and does impose sanctions against foreign States and non-state entities through a complex formula involving several different Acts and regulation sets.  Navigating through this myriad of rules can be daunting.

Overview of Canada’s Sanctions Regime

Global Affairs Canada is the overall regulator of Canadian sanctions, and has just released some long-awaited clarifications on the scope of Canada’s current sanctions, which comes in response to the Canadian Senate’s 2023 Standing Committee Report on Foreign Affairs and International Trade. 

Canada-India trade and trade relations have plunged, stopped in their collective tracks by a Canadian government allegation that India may have been involved in the assassination of a Canadian Sikh activist.

In the balance is whether a Canada-India Free Trade Agreement (“FTA”) will ever come to fruition, and Canada’s growing trade with this aspiring superpower.

Here are the high points on why and why not a FTA with India would be a good thing for Canada.

On April 22, 2024, the Canada Border Services Agency (“CBSA”) issued a Notice of Initiation of Investigation under the Special Import Measures Act (“SIMA”) in respect of the alleged dumping and subsidizing of certain pea protein from China.  This investigation was prompted by a joint complaint filed by two manufacturers in Manitoba. 

The goods under investigation are more specifically described as: 

High protein content (“HPC”) pea protein originating in or exported from the People’s Republic of China in all physical forms regardless of packaging, with a minimum pea protein content of 65 percent on a dry weight basis calculated using a Jones factor of 6.25 (the “Subject Goods”).  

As we initially described here, the Canada Revenue Agency (“CRA”) continues auditing and assessing individual home-owners who have either substantially re-built their homes or commissioned the construction of a new home for their own use on the resale value of those homes in a number of alarming instances.

On March 20, 2024, Public Safety Canada (“PSC”) released updated guidance (“Guidance”) on the application of the Fighting Against Forced Labour and Child Labour in Supply Chains Act (the “FCLA”).

While PSC’s update is aimed to provide clarity, it left many ambiguities, particularly regarding the definitions of “consolidated financial statements”, “asset” and “control”.  These terms play a critical role in determining whether a foreign entity may fall within the reporting requirements of the FCLA.

As we wrote about here Canada’s carbon tax system is complicated and causing problems.

Recently, the Canada Revenue Agency (“CRA”) has been auditing and issuing assessments based on the technical requirements of the legislation.

Background

Canada’s carbon tax legislation is called the Greenhouse Gas Pollution Pricing Act – and we will refer to it as the Carbon Tax Act or “CTA”.  The CTA was enacted in 2018.  Part of it enacts a “fuel tax” (called a “Fuel Charge” for optics) which adds additional Canadian taxation points to all transactions involving combustive fossil fuels.  The Fuel Charge is levied under Part I of the CTA.

The Canadian International Trade Tribunal (the “CITT”) announced an Order in Expiry Review RR-2023-001 on March 20, 2024 (the “Order”), continuing its finding made on April 23, 2018, in Expiry Review NQ-2017-005, in respect of the dumping and subsidizing of all dry wheat pasta originating in or exported from the Republic of Türkiye (the “Subject Goods”).

What is an Expiry Review

Expiry Reviews are conducted jointly by the Canada Border Services Agency (the “CBSA”) and the CITT to review prior Anti-Dumping Duty (“ADD”) or Countervailing Duty (“CVD”) findings made by the CITT (the “Findings”) under the Special Import Measures Act (“SIMA”). These Expiry Reviews generally occur every 5 years following the original finding or subsequent continuation orders (“Orders”).

In today’s economy, every dollar counts, a sentiment echoed by the Federal government.  It appears that BC Finance also dances to this tune, as the province’s 2024 Budget includes an amendment to the definition of “software” in the BC Provincial Sales Tax Act(“PSTA”), retroactive to April 1, 2013! 

While the amendment is described as “clarifying” the definition, it is difficult not to see it as BC Finance’s response to a recent tax appeal decision from the Supreme Court of British Columbia.

The Canadian International Trade Tribunal (the “CITT”) announced an Order in Expiry Review RR-2021-004 on October 19, 2022 (the “Order”), continuing its order made on January 4, 2017, in Expiry Review NQ-2016-002, in respect of the dumping of certain gypsum board products originating in or exported from the U.S., imported into Canada for use or consumption in the provinces of BC, AB, SK, and MB, as well as NT and YK (the “Subject Goods”). 

In a “bad news case” for unsecured creditors, the Federal Court has confirmed that the CRA’s deem trusts over things like unpaid GST/HST and income tax source deductions take precedence to prevent loan repayment to unsecured creditors.  This means that related and unrelated persons loaning money to Canadian small businesses on an unsecured basis (which is common - think about the loans being advanced by business partners, parents and spouses) are at risk when those businesses default on their tax obligations.