2018 Tax Alerts – Canada
Tax Alerts cover significant tax news, developments and changes in legislation that affect Canadian businesses.
- FES announces significant acceleration of CCA
No. 40, 22 November 2018On 21 November 2018, Finance Minister Bill Morneau presented the Fall Economic Statement in the House of Commons. On the same day, the Minister tabled a notice of ways and means motion to amend the Income Tax Act and the Income Tax Regulations, which was accompanied by explanatory notes relating to these measures.
The statement introduced three key capital cost allowance (CCA) acceleration measures:
- Full expensing for M&P machinery and equipment
- Full expensing for clean energy equipment
- An accelerated investment incentive.
- “Foreign specified suppliers”: less than two months to register
No. 39, 2 November 2018Non-Québec resident suppliers that are located outside Canada and not registered for the purposes of the goods and services tax (GST) meet the definition of “foreign specified suppliers” and have until 1 January 2019 to comply with the new provisions of the Act respecting the Québec sales tax (AQST). Under these new provisions, these foreign specified suppliers are required to register for the Québec sales tax (the QST) using a new specified registration system and will have to collect the QST on taxable incorporeal movable property and services they supply in Québec to specified Québec consumers. Non-Québec resident suppliers located outside Canada that are registered for the GST and non-Québec resident suppliers located in Canada meet the definition of Canadian specified suppliers and have until 1 September 2019 to comply with the new provisions.
- Finance tables NWMM and adjusts T1134 deadline
No. 38, 29 October 2018On 25 October 2018, federal Finance Minister Bill Morneau tabled a notice of ways and means motion (NWMM) that includes most of the draft legislative proposals released on 27 July 2018 relating to outstanding measures announced in the 2018 federal budget, a revised version of the amendments concerning foreign spinoffs and the shareholder benefit rules, and some indirect tax measures. The NWMM also includes various other previously announced income tax and GST/HST legislative proposals. It takes into account comments received since the previous release of the draft legislative proposals and, most notably, addresses concerns raised over the 2018 federal budget proposal to shorten the filing deadline for information returns in respect of a taxpayer’s foreign affiliates (Form T1134, Information Return Relating to Controlled and Not-Controlled Foreign Affiliates).
- BC introduces SVTA
No. 37, 24 October 2018On 16 October 2018, Bill 45, Budget Measures Implementation (Speculation and Vacancy Tax) Act, 2018 also received first reading in the British Columbia legislative assembly. If enacted, Bill 45 would impose an annual speculation and vacancy tax (SVT), payable by owners of residential property in designated taxable regions of British Columbia.
- BC introduces EHT
No. 36, 24 October 2018On 16 October 2018, Bill 44, Budget Measures Implementation (Employer Health Tax) Act, 2018 received first reading in the British Columbia legislative assembly. If enacted, Bill 44 will introduce an employer health tax (EHT) or “payroll” tax on employers’ payrolls commencing in the 2019 calendar year.
- Steel safeguard surtax/remission of surtaxes on certain US origin goods
No. 35, 16 October 2018On 11 October 2018, the Department of Finance announced a new global safeguard surtax with exceptions for certain free-trade partners, lesser-developed countries entitled to the general preferential tariff and the United States. The measure is intended to prevent diversion of foreign steel products into Canada and also to assist in negotiations with the US regarding removal of the US special tariffs on steel and aluminum. At the same time, Finance announced a product-specific Remission Order made 10 October 2018 for relief in specific circumstances from the surtax on steel and aluminum products (and certain pleasure vessels) subject to the retaliatory surtax measures on products originating in the US. Learn more in our latest Tax Alert.
- USMCA to replace NAFTA
No. 34, 4 October 2018On 1 October 2018, US President Donald Trump announced an agreement with Canada and Mexico to replace the existing North American Free Trade Agreement 1994 (NAFTA) between the US, Mexico and Canada with a new agreement to be called the United States Mexico Canada Agreement (USMCA). While not effective immediately (NAFTA will live into 2019 or even longer depending on the US legislative and implementation process), it is a new agreement and there are some significant changes. Learn more in our latest Tax Alert.
- TCC finds for the taxpayer in Cameco transfer pricing case
No. 33, 2 October 2018On 26 September 2018, the Tax Court of Canada (TCC) rendered its decision in Cameco Corporation v. the Queen. The TCC found for the taxpayer, concluding that none of the transactions, arrangements or events in issue was a sham, and reversed the Minister’s transfer pricing adjustments for each of the taxation years in question. Learn more in our latest Tax Alert.
- ETA holding corporation proposals
No. 32, 13 August 2018On 27 July 2018, the Department of Finance released a package of draft legislative proposals and explanatory notes including draft amendments to the holding corporation rules contained in section 186 of the Excise Tax Act (ETA) that would broaden the “commercial operating corporation property test” an operating corporation must meet for the parent to benefit from the holding corporation rules. Learn more in our latest Tax Alert.
- Finance releases draft legislation for 2018 budget for comment
No. 31, 30 July 2018On 27 July 2018, the Department of Finance released for public comment a package of draft legislative proposals and explanatory notes relating to a number of measures announced in the 2018 federal budget, together with a revised version of an income tax measure originally announced on 16 September 2016, as well as some other indirect tax measures. The government also released a consultation paper on proposed changes to the GST/HST holding corporation rules. Interested parties are invited to provide comments on the legislative proposals by 10 September 2018, and on the consultation paper by 28 September 2018. Learn more in our latest Tax Alert.
- Trade compliance verification list update
No. 30, 29 July 2018On 6 July 2018, the Canada Border Services Agency (CBSA) released its semi-annual list of trade compliance verification (audit) priorities.
At the midpoint of 2018, the CBSA remains focused on tariff classification as a priority audit area, with the introduction of three new tariff classification product categories and five new rounds to the list of existing priorities.
- Duties relief and duty drawback on recent surtaxes
No. 29, 19 July 2018EY has confirmed that importers can take advantage of the Duties Relief Program and/or Duty Drawback Program to defer or obtain a refund of the recent surtax imposed under the United States Surtax Order (Steel and Aluminum) (SOR/2018-152) and the United States Surtax Order (Other Goods) (SOR/2018-153) for imported goods that are re–exported or are used as inputs or consumed in producing other goods for export. In addition, the federal government has announced a remission program to relieve unfair applications of the surtax or hardship in limited circumstances.
- CRA 2017 APA report highlights
No. 28, 18 July 2018On 12 July 2018, the Canada Revenue Agency (CRA) released its Advance Pricing Arrangement (APA) Program Report for the 2017 calendar year. The report provides an overview of the operations of the Canadian APA program, including statistical analyses of APAs completed and in progress.
- New GST/HST rules on carbon emission allowances
No. 27, 11 July 2018On 27 June 2018, the Department of Finance released draft changes to the Excise Tax Act, RSC 1985, c. E-15, as amended, that will alter the way GST/HST is accounted for on the transfer of emission allowances (including emissions credits traded under the cap and trade systems that are in place in certain provinces). These changes propose to treat GST/HST on emission allowances similarly to how GST/HST is accounted for on the transfer of commercial real property.
- Québec: Bill 150 respecting the QST and e-commerce receives Royal Assent
No. 26, 10 July 2018On 12 June 2018, Québec Bill 150 received Royal Assent. In particular, it contains legislative changes following the measures announced in the Québec budget tabled on 27 March 2018 relating to the application of the Québec sales tax (“QST”) to supplies made by suppliers with no significant presence in Québec through the implementation of a new “specified registration system.”
- Sales and use tax ramifications following US Supreme Court decision
No. 25, 09 July 2018On 21 June 2018, the United States Supreme Court issued its ruling in South Dakota v. Wayfair. As a result of the Court’s decision, e-commerce vendors may be required to collect and remit South Dakota sales tax for sales made to South Dakota consumers, even where such vendors do not have any offices, warehouses or employees in the state. Compliance costs for Canadian online vendors could increase substantially if other states decide to enforce sales tax legislation similar to that of South Dakota.
- Final import surtaxes on certain US products
No. 24, 06 July 2018Effective 1 July 2018, Canada imposed a 25% or 10% surtax on steel and aluminum products and many consumer goods originating in the United States. The Canada Border Services Agency issued Customs Notice 18-08 clarifying the application of the surtaxes and discussing exclusions therefrom as well as the applicability of Canada’s duty deferral and drawback regimes to re-exports of such goods or goods containing or incorporating manufacturing from such goods. The revised list of covered tariff items is provided in the United States Surtax Order (Steel and Aluminum) and the United States Surtax Order (Other Goods).
- Tariffs coming on some US products
No. 23, 13 June 2018Effective 1 June 2018, the United States followed through on its announcement to impose general tariffs on certain imports of Canadian steel and aluminum products. In response, Canada proposed retaliatory measures against CDN$16.6 billion worth of US imports of steel, aluminum and many finished goods.
- Nunavut budget 2018-19
No. 22, 29 May 2018Nunavut Finance Minister David Akeeagok tabled the territory’s fiscal
2018-19 budgeton 28 May 2018.
- Ontario files regulations to facilitate land transfer tax compliance
No. 21, 8 May 2018On 26 April 2018, Ontario filed Regulation 343/18, Timing of Tax Payable under Subsection 3(2) of the Act, in accordance with the Land Transfer Tax Act (LTTA). This regulation sets out quarterly filing requirements for dispositions of a beneficial interest in land that change the composition of certain trusts and partnerships. These requirements apply to qualifying dispositions occurring on or after 1 January 2018.
- Saskatchewan budget 2018-19
No. 20, 11 April 2018Saskatchewan Finance Minister Donna Harpauer tabled the province’s fiscal
2018-19 budgeton 10 April 2018.
- Prince Edward Island budget 2018-19
No. 19, 9 April 2018PEI Finance Minister Heath MacDonald tabled the province’s fiscal
2018-19 budgeton 6 April 2018.
- Québec announces QST and e-commerce measures
No. 18, 5 April 2018Through budget provisions presented on 27 March 2018, the Québec government intends to implement a new mandatory specified registration system for suppliers with no physical or significant presence in Québec to ensure the Québec sales tax (QST) is collected and remitted in the context of the digital economy.
- Ontario budget 2018-19
No. 17, 28 March 2018Ontario Finance Minister Charles Sousa tabled the province’s
2018-19 budgeton 28 March 2018.
- Quebec budget 2018-19
No. 16, 27 March 2018Quebec Finance Minister Carlos J. Leitão tabled the province’s fiscal
2018-19 budgeton 27 March 2018.
- Newfoundland and Labrador budget 2018-19
No. 15, 27 March 2018Newfoundland and Labrador Finance Minister Tom Osborne tabled the province’s fiscal
on 27 March 2018. 2018-19 budget
- CPTPP agreement is signed
No. 14, 23 March 2018The Comprehensive and Progressive Trans-Pacific Agreement for Partnership (CPTPP) (formerly the 11-member Trans-Pacific Partnership agreement or TPP-11) was signed by its member states, including Canada, on 8 March 2018. The agreement covers a market of 495 million people with a combined GDP of CAD$13.5 trillion, or nearly 13.5% of global GDP.
- Alberta budget 2018-19
No. 13, 22 March 2018Alberta Finance Minister Joe Ceci tabled the province’s fiscal
2018-19 budgeton 22 March 2018.
- Nova Scotia budget 2018-19
No. 12, 20 March 2018Nova Scotia Finance and Treasury Board Minister Karen Casey introduced the province’s fiscal 2018-19 budget on 20 March 2018.
- FCA reaffirms CIP outside litigation context
No. 11, 16 March 2018On 6 March 2018, the Federal Court of Appeal (FCA) rendered its decision in Iggillis Holdings Inc. v. the Queen, relating to solicitor-client privilege. The FCA overturned the previous Federal Court decision and concluded that a legal memorandum was protected from disclosure to the Minister by solicitor-client privilege acknowledging common interest privilege (CIP) in a transactional context.
- Manitoba budget 2018-19
No. 10, 12 March 2018Manitoba Finance Minister Cameron Friesen tabled the province’s fiscal
2018-19 budgeton 12 March 2018.
- Yukon budget 2018–19
No. 09, 2 March 2018Yukon Finance Minister Sandy Silver tabled the territory’s fiscal 2018–19 budget on 1 March 2018.
- Private company insights:
federal budget 2018-19
No. 08, 27 February 2018Read our executive summary highlights of Budget 2017 that are relevant to private companies and their shareholders.
- Federal budget 2018-19
No. 07, 27 February 2018Read our late-breaking Tax Alert on the 2018-19 federal budget.
- British Columbia budget 2018-19
No. 06, 20 February 2018BC Finance Minister Carole James tabled the province’s fiscal
2018-19 budgeton 20 February 2018.
- Northwest Territories budget 2018-19
No. 05, 9 February 2018Northwest Territories Finance Minister Robert C. McLeod tabled the territory’s fiscal
2018-19 budgeton 8 February 2018.
- New Brunswick budget 2018-19
No. 04, 31 January 2018New Brunswick Finance Minister Cathy Rogers introduced the province’s fiscal
2018-19 budgeton 30 January 2018.
- Customs compliance verification list update
No. 03, 22 January 2018The Canada Border Services Agency (CBSA) has released its semi-annual list of trade compliance verification (audit) priorities. At the start of 2018, the CBSA remains focused on tariff classification as a priority audit area, with the introduction of six new tariff classification product categories to the list of existing priorities.
- Canada releases carbon tax proposals
No. 02, 18 January 2018On 15 January 2018, the Department of Finance and the Department of Environment and Climate Change released for public comment draft legislative proposals and explanatory notes for a federal carbon backstop pricing system. The federal carbon pricing system would consist of two elements: a broad-based charge on fossil fuels or carbon tax, and an output-based pricing system regulatory framework.
- Canada files WTO complaint against US
No. 01, 10 January 2018On 10 January 2018, an official Request for Consultations document (or complaint) filed by Canada in late December was circulated to other WTO members (the first step in the dispute settlement process). Canada claims that the US applies trade remedy law measures that are inconsistent with US obligations under WTO agreements.