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Over the past decade, taxpayers have paid increasing attention to commodity taxes, including the federal goods and services tax, provincial sales taxes, excise duties and taxes, customs duties and miscellaneous provincial taxes, such as tobacco, fuel and gasoline. Both the federal and provincial governments raise significant amounts of revenue annually through these non-income tax measures.

Blakes was one of the first full-service law firms to anticipate this trend and has a group of lawyers practising exclusively in commodity tax and customs.

Scope of Practice

Blakes Commodity Tax & Customs Group provides all aspects of commodity tax advice, from conventional tax planning to appearing as counsel before various courts and administrative tribunals. Other services include handling assessments and appeals (both at the administrative level and before the courts and tribunals), obtaining rulings, advising on start-ups, acquisitions and reorganizations, and delivering opinions on specific issues in this highly specialized area of practice. We also act as counsel to several business associations on commodity tax issues and have been editors and contributors to leading commodity tax and customs publications. We have also been involved with advising the Department of Finance and providing input to various professional organizations regarding the introduction and implementation of the goods and services tax.

Our lawyers frequently act as "special counsel" to other law firms without commodity tax practitioners in commodity tax-driven transactions, such as reorganizations. The Commodity Tax & Customs Group routinely works with our corporate lawyers and litigators in matters where commodity tax issues may be relevant.

The Commodity Tax & Customs Group is familiar with the commodity tax concerns of all kinds of conventional manufacturing, retailing, distributing and service organizations. The Firm's diversified client base and national exposure enables us to provide effective advice to clients with unique commodity tax concerns, such as those involved in securitizations, cross-border leasing, windups and amalgamations, interprovincial transportation of goods and passengers, crown corporations and financial institutions.

Goods and Services Tax

The introduction of the goods and services tax as a broad-based tax on most goods and services means that virtually all contracts and arrangements should be reviewed with this tax in mind. The Firm's involvement in the goods and services tax has been with registration, compliance, planning and assisting clients with qualifying for exemptions from goods and services tax. The Commodity Tax & Customs Group is involved with all aspects of the goods and services tax, including its often complex application to real property development through joint ventures and partnerships. The Commodity Tax & Customs Group works closely with the Real Estate Group to ensure that any real property development and proposals our clients are involved in are properly structured from a goods and services tax perspective. The Commodity Tax & Customs Group also often provides advice on the goods and services tax implications of sales of business assets, and as to the availability of tax-free elections. The Commodity Tax & Customs Group also advises our Financial Services and Restructuring & Insolvency Groups on priorities issues as between secured creditors and the Canada Revenue Agency.

Provincial Sales Tax

Each province has its own separate regime for sales and other commodity taxes, such as tobacco, gasoline and fuel tax. We assist our clients with satisfying licensing/registration requirements for the various taxes and obtaining the full benefits of any exemptions from tax to which they are entitled. The Commodity Tax & Customs Group reviews contracts and arrangements to provide clients with compliance and planning expertise, particularly in the burgeoning and complex areas of electronic commerce, computer software, cross-border transactions and related party asset transfers.

Since many important sales tax issues are common to all provinces, the Commodity Tax & Customs Group monitors legislation and case law in all provinces, thus enabling our clients to benefit from developments in all jurisdictions. We have assisted clients with litigation before the courts in several provinces and with complex constitutional and other issues relating to the imposition of tax on goods used interprovincially.

Customs

The Commodity Tax & Customs Group has considerable experience dealing with the core customs areas of tariff classification, origin and valuation. Canada's conversion to the Harmonized System of tariff classification in 1988 resulted in the introduction of thousands of new tariff classifications. The Tariff Simplification Initiative, implemented on January 1, 1998, constituted a major overhaul of Canada’s tariff schedule and customs laws, and changes to the current structure continue to be made. By continually monitoring developments and rulings in other countries with similar legislation, we can provide "state-of-the-art" advice on all valuation issues, including such topical and complex issues as whether royalties, buying commissions and "assists" are subject to duty.

The introduction of the North American Free Trade Agreement (NAFTA) has generally resulted in increased cross-border activity and the rationalization of North American operations. The Commodity Tax & Customs Group assists clients with the technical requirements of importing goods into Canada under NAFTA and provides advice regarding the complex rules of origin requirements to ensure that our clients structure their affairs to maximize the tariff benefits offered by NAFTA. The Firm’s lawyers also provide assistance and advice to clients under customs compliance verification audit by the Canada Border Services Agency.

Ironically, the liberalization of trade by such programs as NAFTA has resulted in a more detailed review of importations by customs officials. In addition, Canada enacted a new Administrative Monetary Penalty System that became effective on October 7, 2002, and under which penalties of up to $25,000 per contravention are imposed for certain specified errors. As a result, a proper understanding of the import/export process and full compliance with the rules is of utmost importance for companies doing business in and with Canada.

Excise Taxes and Special Levies

Our practice also covers excise taxes and special levies. Certain excise taxes and special levies are imposed at both the federal and provincial levels of government across Canada. Blakes Commodity Tax & Customs Group has expertise in all such taxes. The group has expertise in advising clients on the application of the Excise Act, 2001 under which excise duties are imposed on the manufacture of certain types of alcohol and tobacco. We also advise clients on the various excise taxes imposed pursuant to the Excise Tax Act, including excise taxes on insurance premiums, clocks, watches, jewellery, air conditioners, certain gasoline and other petroleum products.