Category Archives: Analysis

Rapport annuel du Bureau de la protection des droits de la clientèle de Revenu Québec: il reste encore beaucoup à faire!

chateau-frontenac-3462997_1920Depuis plusieurs années, de nombreuses pratiques de Revenu Québec (« RQ ») ont été dénoncées par le public, les médias et différents organismes. Ceci a contribué à la perte de confiance du public envers l’agence gouvernementale.

Dans son rapport annuel 2014-2015, le Protecteur du citoyen déplorait le comportement de RQ auprès des contribuables et soulignait, en résumé :

  • la judiciarisation inutile des désaccords ;
  • l’application de positions rigides malgré les décisions contradictoires des tribunaux ;
  • les méthodes de vérification inadéquates et abusives ;
  • l’émission d’avis de cotisation erronés basés sur des présomptions inadéquates;
  • le refus de RQ de considérer les explications de certains contribuables.

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Le processus d’adoption de l’IM est enclenché

Alain Ranger pratique depuis plus de 30 ans en droit fiscal, plus spécialement en droit fiscal lié au droit des sociétés et au droit des affaires. Au cours des années, Alain a développé une expertise reconnue dans une variété de domaines dont les fusions et acquisitions, les transactions transfrontalières, les réorganisations d’entreprises, les investissements étrangers, les financements structurés et la fiscalité des sociétés.pexels-photo-886465Le 28 mai dernier, le ministre des Finances du Canada a déposé à la Chambre des communes un avis de motion de voies et moyens (l’« Avis ») officialisant ainsi l’intention du Canada de présenter un projet de loi pour mettre en oeuvre les propositions retenues de la Convention multilatérale pour la mise en œuvre des mesures relatives aux conventions fiscales pour prévenir l’érosion de la base d’imposition et le transfert de bénéfices (l’« IM »). L’Avis a été adopté par les parlementaires le 21 juin et le projet de loi a ainsi franchi l’étape de la première lecture à la Chambre des communes.

Pour fins de rappel, le Canada était l’un des signataires de l’IM le 7 juin 2017 et il avait alors annoncé son intention d’adopter les normes minimales proposées par l’OCDE dans le cadre des propositions BEPS ainsi que l’arbitrage obligatoire lié aux différends dans les conventions fiscales. L’Avis prévoit donc l’adoption de ces normes minimales, ainsi que d’autres mesures à l’égard desquelles le Canada avait initialement réservé sa position.

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Canada Life: The Denial of Rescission is a Troubling Decision for Taxpayers and Professional Advisors

pexels-photo-936722On June 21, 2018, the Ontario Court of Appeal handed down a decision in the case of Canada Life Insurance Company of Canada v. the Attorney General of Canada and Her Majesty the Queen in the Right of Ontario. This is a very troubling decision for taxpayers and their professional advisors. The facts are briefly as follows. The Canada Life Insurance Company of Canada (“CLICC”) and certain of its affiliates carried out a series of transactions and events in December 2007. The purpose of the transactions was to realize a tax loss to offset unrealized foreign exchange gains accrued in the same taxation year. The Canada Revenue Agency (the “CRA”) disallowed the claimed loss in the reassessment of CLICC’s taxes for 2007. Asserting that it had proceeded on the basis of erroneous advice from its tax advisor, CLICC applied to the courts for an order setting aside the transactions and replacing them with other steps retroactive to the date of the original transaction.

The problem arose because the tax loss was to be triggered by the winding up of a limited partnership. The mistake was that the general partner of the limited partnership, CLICC GP, was also wound up at the same time that the partnership was wound up. This resulted in the limited partner, CLICC, carrying on the business of the limited partnership alone within three months of the dissolution of the partnership.

CLICC originally applied for an order rectifying the transaction so as to move the winding-up of the general partnership from December 31, 2007 to April 30, 2008. The taxpayer was successful in its application before the application judge. However, the Attorney General appealed the decision. While the appeal was pending, the Supreme Court of Canada, in the case of the Fairmont Hotels,[1] overruled previous decisions which permitted rectification. The change in law restricted the scope of the equitable remedy of rectification to the correction of written agreements. Continue Reading »

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MLI Implementation in Canada

new-york-690868_1920On May 28, 2018, nearly a year after Canada became a signatory to the OECD’s Multilateral Instrument (“MLI”), a notice of ways & means motion has been tabled by the Minister of Finance (Canada) in the House of Commons signalling the Canadian government’s intention to introduce legislation to ratify the MLI.  On June 20, 2018, Bill C-82, which will enact the MLI, received first reading in the House of Commons. The MLI has been signed by 78 countries including Canada.

When the MLI is ratified by Canada and the other signatories, existing bilateral tax treaties may be modified to apply certain agreed to minimum standards  on treaty abuse and improving dispute resolution that were endorsed by participating countries under the OECD /G20 Base Erosion and Profit Shifting (BEPS) Project.

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Quebec to tax the digital economy… and more

ecommerce-2607114_1920In March of 2018, the province of Quebec introduced a proposal to vastly expand the requirements for non–residents of Quebec to collect and remit the Quebec Sales Tax (“QST”) on sales of services and intangible property.  Although no draft legislation has yet been released, these proposals would require both Canadian and non–Canadian suppliers of intangible property or services, whether delivered through a digital platform or not, to register as a collector of the Quebec Sales Tax, and to collect, report and remit such tax on all such sales to unregistered Quebec residents.

These proposals follow the OECD recommendations designed to address the tax challenges associated with the digital economy globally, and appear to be directed primarily at B2C transactions, such that only non–residents of Quebec that make sales to unregistered Quebec resident consumers will be subjected to these new rules.  Further, Quebec has indicated that there will be a $30,000 threshold (calculated on a rolling basis over the previous 12–month period), below which registration will not be required.

Although there are many layers of complexity that will need to be dealt with as the legislation is drafted, Quebec has already made it clear that the tax collected under this new system, as well as those collecting such tax, will not be treated the same as the traditional amounts of QST or the traditional QST collectors.  For example, collectors under this new regime will not be entitled to recover any of their own QST costs by way of input tax refund.

Further, it appears that Quebec will also require certain digital intermediaries (e.g. a third party that provides the digital platform to enable supplies of intangibles) to register and collect the QST on such taxable supplies.  This imposition of a compliance burden on such third party intermediaries, appears similar to similar compliance burdens placed on intermediaries in other value added tax jurisdictions (e.g. in Brazil, credit card companies are obligated to collect, report and remit certain sales taxes on payments made by resident Brazilians to non–resident suppliers of intangibles and services).  Although we note that the Quebec proposals appear to exempt payment processors from such compliance obligations, we questions whether Quebec (and possibly Canada) will continue to move in this direction in order to more fully tax the digital economy.

As can be imagined, there will be many difficulties faced by Quebec in the implementation of this new form of QST, not the least will be ensuring compliance by non–residents.  Although it is likely that Quebec will effectively be able to force compliance by Canadian suppliers that do not otherwise carry on business in Quebec, there will likely be significant challenges in enforcing such registration requirements of non–Canadian suppliers.  Similarly, there will likely be significant challenges faced by such non–resident suppliers in determining whether they are making sales to consumers that are actually subject to this tax.

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