Business Law Blog

On October 30, 2024, the Canadian Securities Administrators (the “CSA”), in conjunction with participating Canadian securities regulators, released the results of its 10^th annual review (the “Review”) of public disclosures from 574 non-venture reporting issuers (the “Issuers”) related to women on boards of directors and in executive officer ...

On August 12, the Department of Finance Canada (“Finance Canada”) released proposed amendments to the Income Tax Act (the “Act”) implementing the new Canadian Entrepreneurs’ Incentive (the “Incentive”). The Incentive aims to reduce the capital gains inclusion rate to one-third on a lifetime maximum of $2 million in eligible capital gains.

The Incentive ...

Earlier this month, Tesla Inc.’s shareholders voted in favour of a re-domestication of the company from Delaware to Texas. The company announced that it had moved to Texas on the same day, meaning that is has ceased to be governed by Delaware corporate law and is now governed by Texas corporate law.^[1]

The proposed move was a reaction to the shareholder protections in ...

Every year, reporting issuers are faced with the task of tailoring the disclosure for their annual general meeting to an ever-evolving list of changes in corporate and securities laws, updates to stock exchange rules, new guidance from proxy advisors and regulators and developing corporate governance trends.

This checklist and overview of certain matters relevant to the 2024 proxy season is intended to help reporting issuers in Canada prepare for their upcoming annual meetings by identifying relevant developments in disclosure rules and governance practices over the past year.

Please download the guide by clicking the link below.

Proxy Season Guide 2024

In the 2023 Federal Budget, the Canadian federal government expressed its intention to reduce the criminal rate of interest currently set out in the Criminal Code^[1] to protect financially vulnerable Canadians from predatory lending practices.^[2] Generally, predatory lending involves certain lenders taking advantage of borrowers by imposing unfair loan terms ...

In a previous blog post, we discussed the recently enacted Fighting Against Forced Labour and Child Labour in Supply Chains Act, also known as the Modern Slavery Act (the “Act”). As a reminder, for those entities to whom the Act applies, the deadline for filing their first annual report under the Act is fast approaching – May 31, 2024.

To help you navigate this new ...

Retroactive changes to the Provincial Sales Tax Act (British Columbia) (the “PSTA”) were announced February 22 by the BC Government in its 2024 budget. Should the enacting legislation^[1] receive royal assent, the changes will be effective as of April 1, 2013.

The most impactful changes would be:

1. A retroactive expansion of the applicability of the PSTA that imposes a requirement on purchasers to pay PST on the purchase price of software acquired for use in BC; and
2. An expanded definition of “software” for purposes of the PSTA.

The BC Government’s stated purpose for the above changes is clarification of what is meant by “software” for PSTA purposes and is meant to be in accordance with the Government views and intentions set out in PST Notice 2023-005 (the “Notice”).^[2] However, the amendments broaden the software definition and, in doing so, upend the 2023 Hootsuite decision.^[3]

In Hootsuite, the Court held that the purchases of AWS direct connect, Amazon Elastic Compute Cloud and Amazon Simple Storage Services were not taxable for the following reasons:

1. The fundamental purpose of the purchases was not to purchase software. For AWS direct connect, the purpose was to obtain technical expertise and for the cloud computing services it was to obtain on-demand infrastructure as a service.^[4]
2. The software involved was not accessible or modifiable by the user and, as such, was not a “software program”.
3. Even if it was a “software program”, there was no direct interaction required with the software program and so it was not “used” in BC.
4. Even if the software program was being “used” in BC, the software program would not be a “sale” under the act as the software program was incidental to the fundamental purchase.

Proposed Changes Expanding Breadth of the PST on Software

The BC Government proposes numerous amendments to the PSTA, under which Hootsuite would likely have been decided differently. Specifically, the definition of “software” would be amended to include:

1. Coded instructions or a right to use coded instructions designed to cause an electronic device to perform a task;
2. Infrastructure as a service^[5] (IaaS);
3. Software as a service^[6] (SaaS); and
4. An application programming interface (an API).

Additionally, the definition of software in the PSTA is modified to be defined inclusively; this adds significant uncertainty in determining what is or is not software.

Further amendments throughout the PSTA broaden the circumstances in which purchasers of software will be required to pay PST, whether or not such PST is charged by the vendor. For example, by circumstantially requiring payment of PST when software is used through an electronic device.

Retroactive Legislation

The Supreme Court of Canada has held that Parliament and legislatures are allowed to retroactively change tax legislation.^[7] That doesn’t mean they should. It upsets the rule of law, creates uncertainty in budgets and can lessen the value of the judicial system. However, retroactive taxation has been an increasing trend at both the national and provincial level.

We expect that the BC government will simply administer the PSTA as if the Hootsuite decision had not occurred in accordance with the Notice and the PST Bulletins referenced therein. Nonetheless, the above described amendments would appear to be broader than is strictly necessary to overturn the Hootsuite decision.

For any inquiries regarding this topic, please contact Max Walker, Chelsea Colwill or any member of Lawson Lundell’s Tax Group.

^{[1] Bill 3, Budget Measures Implementation Act, 2014, 5th Sess, 42 Parl, 2024, (as passed by the House of Commons 13 June 2005).}

^{[2] British Columbia, Ministry of Finance, Notice to Providers and Purchasers of Cloud Software and Services, Notice 2023-005 (Provincial Sales Tax Notice).}

^{[3] 2023 BCSC 358.}

^{[4] The court defined “infrastructure as a service” as “where the cloud provides access to computational resources or data storage but the where a variety of applications can take advantage of this boost in hardware resources”.}

^{[5] Infrastructure as a service would be defined in the PSTA as including “access to computational services or the right to access computational services, including computing or processing capacity and electronic storage”.}

^{[6] Software as a service would be defined in the PSTA as including “software or the right to use software when possession of the software is maintained by the provider of the software or another person other than the person to whom the software is being provided”}

^{[7] British Columbia v Imperial Tobacco Canada Ltd, [2005] 2 SCR 473, at paragraphs 69 and 71.}

In November 2023, a justice of the B.C. Supreme Court made an order declaring that an unsigned will was valid despite it not being signed as it was found to represent the deceased’s testamentary intentions.

On April 16, 2022, James Christopher Salisbury (“Mr. Salisbury”) passed away, leaving behind his wife, Hiedi Salisbury (“Mrs. Salisbury”), and five ...

The past two federal budgets introduced various new refundable investment tax credits (“Refundable ITCs”) to encourage and promote the increased adoption of alternative or renewable energy.  In the words of the Federal Government, the “transformational new big five Clean Investment Tax Credit…will help produce, manufacture, or transition to clean energy in ...

For tax years ending on or after December 31, 2023, most bare trusts will be required to file a T3 trust income tax return, regardless of the absence of any income to report, and may also be required to disclose information about the beneficiaries of the bare trust (referred to as a Schedule 15 disclosure).

A “bare trust” is not technically a legal term but is a commonly used ...