by Marc Weisman of Torkin Manes LLP
The GST/HST Web Registry (www.cra.gc.ca/gsthstregistry) was first announced in the Federal Budget of February 23, 2005, and is authorized pursuant to subsection 295(6.1) of the Excise Tax Act (Canada) (the “ETA”).
The purpose for the Registry is to allow one to check whether a person (including a corporation, partnership, trust etc.) is registered for GST/HST. As long as one has the person’s full name as registered with the Canada Revenue Agency (the “CRA”) and their GST/HST registration number, a GST/HST verification can be made. The Registry can be used by: a purchaser, that intends to claim input tax credits on the purchase of goods and services, to ensure that the GST/HST registration number on a vendor’s invoice is valid (see subsection 169(4) of the ETA); and a vendor of commercial real estate that does not intend to collect GST/HST from a purchaser if the latter is GST/HST-registered (see paragraph 221(2)(b) of the ETA).
Unfortunately, many users of the Web Registry are not aware of the fact that using the Registry is not without caution.
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by Timothy Fitzsimmons of Fraser Milner Casgrain LLP
In Hine v. The Queen (2012 TCC 295), a decision released last week, the Tax Court of Canada considered whether a taxpayer was “grossly negligent” in relying on his accountant (who happened to be his wife) to prepare his tax return, and whether the taxpayer’s written offer to settle (asking the Crown to concede entirely) should be considered when making a cost award.
The decision in Hine is helpful in determining (a) whether the taxpayer was grossly negligent in relying entirely on his tax preparer, and (b) whether a settlement offer may be ignored by the Tax Court in awarding costs.
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by Paul Stepak and Sabrina Wong of Blake, Cassels & Graydon LLP
On August 14, 2012, the Minister of Finance released for consultation draft legislative proposals (the August 14 Proposals) to implement income tax measures proposed in the March 2012 federal Budget (the Budget Proposals). The government has invited comments by September 13, 2012. It is expected that the government will then introduce these measures into Parliament in the autumn 2012 session.
Included in the Budget Proposals was a sweeping and aggressive set of proposals to dramatically change the rules relating to the acquisition, ownership and financing of foreign affiliates (FAs) (generally meaning foreign companies in which the Canadian shareholder has at least a 10% interest) by foreign-controlled Canadian companies. This was done in an effort to deter Canadian subsidiaries of foreign-based multinational groups from making investments in non-resident corporations that are (or become) FAs of the Canadian subsidiary in situations where these investments can result in inappropriate erosion of the Canadian tax base, referred to as “foreign affiliate dumping”.
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by Ronald I. Meltzer and David J. Ross of Wilmer Cutler Pickering Hale and Dorr LLP
On August 10, President Obama signed into law another expansion of US sanctions against Iran and Syria that, most significantly, makes US firms liable for their foreign subsidiaries’ involvement in sanctionable activity in Iran and further subjects non-US firms and their corporate officers to possible US sanctions. The Iran Threat Reduction and Syria Human Rights Act of 2012 (“Act”), like its 2010 predecessor, the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (“CISADA”), broadens the Iran Sanctions Act of 1996 (“ISA”) by requiring the President to take action against non-US firms involved directly or indirectly in specified transactions with Iran.
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by Fred Pletcher, Graeme Martindale, and Michael Waters of Borden Ladner Gervais LLP
The Canadian Securities Administrators (CSA) has published CSA Staff Notice 43-307 Mining Technical Reports – Preliminary Economic Assessments in order to clarify its position on several issues regarding the use and disclosure of preliminary economic assessments – also known as “PEA”s.
Under National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101), a PEA is defined as a study, other than a prefeasibility study or feasibility study, which includes an economic analysis of the potential viability (as opposed to economic or technical viability) of mineral resources. In addition, unlike a pre-feasibility study or feasibility study, NI 43-101 allows issuers to include inferred mineral resources in a PEA, provided specific cautionary language is also disclosed.
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by Christian Orton of Fraser Milner Casgrain LLP
In order to administer and enforce the self-reporting system of tax assessment in Canada, the Income Tax Act (ITA) and Excise Tax Act (ETA) provide the CRA with the power to demand certain information from taxpayers. Generally, this information is collected for the purposes of auditing a taxpayer, but may also be obtained where no audit is conducted. For example, the CRA may access such information for the purpose of evaluating whether record-keeping requirements have been complied with. Higher statutory thresholds are imposed on the CRA – such as requiring a search warrant issued by a judge – where the information sought would not normally be required for an audit.
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by the Securities Group at Stikeman Elliott LLP
On August 3, the Investment Industry Regulatory Organization of Canada (IIROC) released a new strategic plan for 2012-2015. The plan sets out IIROC’s strategic goals for the next few years, namely (i) promoting a culture of compliance; (ii) promoting the protection of the investing public; (iii) delivering effective and expert regulation; (iv) strengthening the fairness, integrity and competitiveness of the Canadian capital markets; (v) acting in an accountable, transparent and fair manner; (vi) being a cost-effective and efficient organization; and (vii) being an employer of choice.
Of particular interest, the plan provides information regarding
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by Earl Phillips of McCarthy Tétrault LLP
A judge in BC has ruled that a unilateral change to an employee’s bonus was constructive dismissal: Piron v. Dominion Masonry. That was despite the employer’s plea that the bonus was discretionary, and despite the evidence that the bonus varied widely from year to year and project to project.
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by Meir A. Lewittes and Eric I. Moskowitz of McDermott Will & Emery
Selling a family-owned business will typically be a once-in-a-lifetime event. Throughout the transaction, owners of a closely-held company must concurrently maintain the ordinary course operations of the business, while at the same time negotiating the sale with the buyer in strict confidence. The stakes are high, with major financial and emotional implications for sellers and their families. This makes navigating the sale process both an exhilarating and arduous experience. Below are five tips for family business owners to ensure they are well-prepared to court prospective purchasers and close a deal.
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by Dianne Saxe
Health Canada’s wind turbine health study is doomed to irrelevance, because it is largely based on asking people whether they are annoyed about wind turbines. With this methodology, Health Canada could “prove” that people are annoyed and distressed about any number of things: extreme summer heat and drought; traffic congestion; electricity rates; taxes; gun crime, etc. And I expect they could prove annoyance and sleep disturbance among people near a wide range of noise sources, including highways, airports, gun clubs, racetracks, Toronto’s entertainment district, motorcycles, outdoor bars and the Indy.
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by Robert A. McTarmaney of Carter Ledyard & Milburn LLP
The Joint Venture as a vehicle for doing business has increased dramatically in popularity recently as businesses constantly seek the most effective and efficient production and sales approaches for each business line.
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by Andrew Gray of Torys LLP
In its recent decision in Re Donald, the Ontario Securities Commission found that a person who traded securities of a reporting issuer while he knew about a potential acquisition of that company did not violate insider trading rules but did act contrary to the public interest. The decision highlights the risks associated with trading in securities of a potential takeover bid target while an acquisition is being considered.
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by Daniel Glazer of Fried, Frank, Harris, Shriver & Jacobson LLP
Originally published by Practical Law Company
[Ed. note: We post this U.S. legal practice note to assist non-lawyers with planning M & A due diligence on intellectual property. All external links to agreement templates require a subscription.]
This Note highlights key intellectual property (IP) considerations in asset purchase transactions involving all or substantially all of the seller’s assets or a division or line of business. It discusses legal due diligence of IP assets that are included in the purchased assets and drafting and negotiating IP aspects of asset purchase agreements (including representations and warranties) and ancillary agreements. It also addresses certain information technology (IT) considerations.
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by Samantha Horn of Stikeman Elliott LLP
Working capital adjustments were originally designed to ensure that enough cash remains in an acquired business to allow it to operate in the ordinary course post-closing without requiring a capital infusion by the new parent or shareholder(s), or to compensate the purchaser or vendor in the event that there is too little or too much cash, respectively, in comparison with what is needed to support the business’ ordinary course operations. This is typically accomplished by specifying a working capital “peg” (an estimate calculated based on normalized historical averages) as of the closing date. Within a 60 or 90 day period after closing, the actual normalized working capital as of the closing date is calculated and compared against the peg, and the purchase price is typically adjusted up or down accordingly.
The way working capital adjustments are being used is changing, however. With a more competitive environment for transactions and with the speed at which letters of intent and term sheets are being negotiated for transactions, we have seen additional pressure on selecting a purchase price in advance of completion of due diligence or in setting a purchase price high enough in order to win in an auction or competitive bid situation. As a result, working capital adjustments may be used as a purchase price adjustment mechanism, and particularly with respect to issues which may arise in due diligence, after the target purchase price is set or once exclusivity has been negotiated.
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