Tax Alert – Canada
Tax Alerts cover significant tax news, developments and changes in legislation that affect Canadian businesses.
- Trade compliance verification list update
No. 31, 13 August 2019
The Canada Border Services Agency (CBSA) released its semi-annual list of trade compliance verification (audit) priorities in July 2019. The list is designed to update the importing community on ongoing verification priorities and set the stage for new priorities for the upcoming calendar year.
The CBSA continues to focus on tariff classification as a priority audit area, with the introduction of eight new rounds to the list of tariff classification priorities.
- Finance releases draft legislation for 2019 budget for comment
No. 30, 1 August 2019
On 30 July 2019, the Department of Finance released for public comment draft legislative proposals (and accompanying explanatory notes) to implement measures remaining from the 2019–20 federal budget, as well as revisions to the recently enacted measures concerning accelerated capital cost allowance (CCA) and resource expenses.
Interested parties are invited to provide comments on these draft legislative proposals by
7 October 2019.
- CBCA changes: tax implications
No. 29, 10 July 2019
As of 13 June 2019, private corporations incorporated under the Canada Business Corporations Act are required to maintain a register of shareholders who, directly or indirectly, exercise “significant control” over a corporation. These amendments are expected to be followed by similar amendments to the counterpart legislation in the provinces and territories.
The amendments are intended to improve corporate transparency, a goal that the Canadian federal, provincial and territorial finance ministers committed to when they signed an Agreement to Strengthen Beneficial Ownership Transparency in 2017.
- Prince Edward Island
No. 28, 26 June 2019
PEI Finance Minister Darlene Compton tabled the province’s fiscal 2019–20 budget on 25 June 2019.
- CCA acceleration enacted
No. 27, 24 June 2019
On 21 June 2019, Bill C-97, Budget Implementation Act, 2019 No. 1, which implements certain tax measures announced in the 2019 federal budget and the 21 November 2018 federal fall economic statement (as well as other previously announced measures), received Royal Assent.
As a result, the business income tax measures contained in Bill C-97 are now enacted for financial reporting purposes. Most notably, the capital cost allowance (CCA) acceleration measures that were first announced in the 21 November 2018 federal fall economic statement, including some modifications since their initial release, are now enacted.
- Proposed changes to stock option rules: update
No. 26, 20 June 2019
On 17 June 2019, federal Finance Minister Bill Morneau tabled a Notice of Ways and Means Motion that contains proposed changes to the tax treatment of employee stock options that were announced in the 19 March 2019 federal budget. The proposals include a $200,000 annual limit on employee stock option grants that can receive tax-preferred treatment under the current employee stock option rules.
In addition, stakeholders are invited to provide input on the characteristics of companies that should be considered start-ups, emerging and scale-up under the new rules by 16 September 2019.
- Newfoundland and Labrador budget 2019–20 reintroduced
No. 25, 12 June 2019On 11 June 2019, Newfoundland and Labrador Finance Minister Tom Osborne retabled the province’s pre-election fiscal 2019-20 budget as its post-election fiscal 2019-20 budget.
- ETA holding corporation proposals: update
No. 24, 27 May 2019
On 17 May 2019, the Department of Finance (Finance) released a package of draft legislative proposals and explanatory notes relating to the holding corporation rules contained in section 186 of the Excise Tax Act (ETA). These proposals would extend the application of the rules to include holding partnerships and trusts. Finance indicated that it had considered submissions from industry stakeholders and other interested parties relating to the original legislative proposals released on 27 July 2018, as well as a consultation paper released on the same day.
In addition to the proposed changes to the holding corporation rules, Finance has released draft amendments to the ETA that would:
- Extend the application of the drop shipment rules to commercially interchangeable or fungible goods
- Treat virtual currency as a financial instrument for GST/HST purposes
- Expand the definition of a freight transportation service so that zero-rated international freight transportation services would include international driving services
Interested parties are invited to provide comments on these legislative proposals by 17 June 2019.
- New disclosure requirements and penalties in Québec
No. 23, 23 May 2019
On 17 May 2019, the Québec Ministry of Finance released Information Bulletin 2019-5, “Measures designed to protect the integrity and fairness of Québec’s tax system.“
This bulletin announces new measures to oppose aggressive tax planning by imposing significant new penalties and disclosure requirements on both taxpayers and tax advisors and promoters.
- Canada imposes final steel safeguards: update
No. 22, 22 May 2019Effective 13 May 2019, Canada will apply final safeguard orders on imports of heavy steel plate and stainless-steel wire imported from all countries except for:
- Goods originating in Canada;
- Goods originating in Chile, Colombia, Mexico, Panama, Peru, South Korea, the US or Israel or another Canada-Israel Free Trade Agreement beneficiary; and
- Goods originating in a World Trade Organization member country that is a beneficiary of the General Preferential Tariff.
- Canada/US agree to remove surtaxes/tariffs
No. 21, 21 May 2019On 17 May 2019, Canada and the US announced that an understanding has been reached on eliminating the US Section 232 tariffs imposed on Canadian steel and aluminum and Canada’s retaliatory surtaxes.
- Finance announces final steel safeguards
No. 20, 7 May 2019On 26 April 2019, the federal Department of Finance announced that it will enact final safeguards on heavy plate and stainless-steel wire originating from countries other than the US, Mexico, Israel, South Korea, Panama, Peru, Colombia and Honduras, and countries whose goods are eligible for General Preferential Tariff treatment.
- BC LOTA receives first reading
No. 19, 23 April 2019On 2 April 2019, Bill 23, Land Owner Transparency Act (LOTA), received first reading in the British Columbia legislative assembly. If enacted, the LOTA would establish a registry of beneficial ownership of real property in British Columbia to be administered by the Land Title and Survey Authority. Although the LOTA is not a tax statute, the information contained in the registry it establishes would be publicly available and could be shared with tax and law enforcement officials.
- Newfoundland and Labrador
No. 18, 16 April 2019Newfoundland and Labrador Finance Minister Tom Osborne tabled the province’s fiscal 2019-20 budget
on 16 April 2019.
- CITT submits safeguard inquiry report
No. 17, 15 April 2019On 3 April 2019, the Canadian International Trade Tribunal (CITT) submitted to the Governor in Council its safeguard inquiry concerning the future importation into Canada of steel goods that have been subject to a provisional safeguard surtax since 25 October 2018.
- Ontario budget 2019-20
No. 16, 11 April 2019Ontario Finance Minister Victor Fedeli tabled the province’s 2019-20 budget on
11 April 2019.
- CCA acceleration substantively enacted
No. 15, 9 April 2019On 8 April 2019, Bill C-97, Budget Implementation Act, 2019 No. 1, which implements certain tax measures announced in the 2019 federal budget and the 21 November 2018 federal fall economic statement (as well as other previously announced measures) received first reading in the House of Commons. Bill C-97 contains the tax measures that were included in the notice of ways and means motion tabled
on 4 April 2019.
As a result, the business income tax measures contained in Bill C-97 are now substantively enacted for financial reporting purposes. Most notably, the capital cost allowance (CCA) acceleration measures that were first announced in the 21 November 2018 federal fall economic statement, including some modifications since their initial release, are now substantively enacted.
- Federal budget 2019-20 proposes changes to stock option deduction
No. 14, 29 March 2019On 19 March 2019, federal Finance Minister Bill Morneau tabled his fourth budget. The budget proposes significant changes to the tax treatment of employee stock options.
- Nova Scotia
No. 13, 26 March 2019Nova Scotia Finance and Treasury Board Minister Karen Casey introduced the province’s fiscal 2019–20 budget on 26 March 2019.
- Quebec budget 2019-20
No. 12, 21 March 2019Quebec Finance Minister Eric Girard tabled the province’s fiscal 2019-20 budget on 21 March 2019.
- Saskatchewan budget 2019-20
No. 11, 20 March 2019Saskatchewan Finance Minister Donna Harpauer tabled the province’s fiscal 2019-20 budget on 20 March 2019.
- New Brunswick budget 2019-20
No. 10, 20 March 2019New Brunswick Finance Minister Ernie Steeves introduced the province’s fiscal 2019-20 budget on 19 March 2019.
- Federal budget 2019-20
No. 09, 19 March 2019Read our late-breaking Tax Alert on the 2019-20 federal budget.
- Customs increases AMPS
No. 08, 15 March 2019On 5 March 2019, the Canada Border Services Agency (CBSA) released Customs Notice 19-05, announcing that 22 contraventions related to commercial trade under the Administrative Monetary Penalties (AMPs) system will be amended with increases to the penalty levels.
- Yukon budget 2019-20
No. 07, 8 March 2019Yukon Finance Minister Sandy Silver tabled the territory’s fiscal 2019-20 budget on 7 March 2019.
- Manitoba budget 2019–20
No. 06, 7 March 2019Manitoba Finance Minister Scott Fielding tabled the province’s fiscal 2019-20 budget on 7 March 2018.
- Québec: Further phasing out of ITR restrictions
No. 05, 21 February 2019The restrictions on obtaining an input tax refund (ITR) applicable to large businesses have been gradually phased out since 1 January 2018. Accordingly, large businesses concerned must once again update their procedures as of 1 January 2019 and increase the rate of the ITRs they claim in respect of restricted expenses from 25% to 50%.
As a result, with respect to taxable benefits provided to employees in 2018, registered employers that are deemed to be large businesses are required to include in the calculation of their net tax to be remitted 25% of the tax arising from taxable benefits related to expenses subject to the restrictions applicable to ITRs.
- Nunavut budget 2019–20
No. 04, 21 February 2019Nunavut Finance Minister George Hickes tabled the territory’s fiscal 2019–20 budget on 20 February 2019.
- British Columbia 2019-20 budget
No. 03, 19 February 2019BC Finance Minister Carole James tabled the province’s fiscal 2019-20 budget on 19 February 2019.
- Customs compliance verification list update
No. 02, 19 February 2019The Canada Border Services Agency (CBSA) released its semi-annual list of trade compliance verification (audit) priorities in January 2019.
The CBSA continues to focus on tariff classification as a priority audit area, with the introduction of two new rounds to the list of tariff classification priorities and one new round to the list of valuation verification priorities.
- Northwest Territories budget 2019-20
No. 01, 7 February 2019Northwest Territories Finance Minister Robert C. McLeod tabled the territory’s fiscal 2019-20 budget on 6 February 2019.