Obtaining specialized cross border commodity tax advice is one of the simplest ways for US companies to protect their bottom line from massive exposure. However, many corporations don’t contact the specialist until an audit has occurred.
Many US corporations do not obtain specialized cross border commodity tax advice for one or more of the following reasons:
1. Commodity tax advice is being provided by my customs broker – they deal with GST every time I import goods
Customs brokers assist you with the mechanical process of paying the Division III GST when they clear goods into Canada.
Customs brokers do not have any involvement with Division II, Division IV or Division IV.1 GST. Brokers do not provide tax structuring advice (for example in certain circumstances the best tax advice may be to have another person in the supply chain clear the goods through customs).
2. The rules are not that complicated
In fact the rules are incredibly complicated and have undergone massive changes recently. Changes have been both legislative and administrative.
The number of assessments levied against US corporations (including large sophisticated corporations) underscores the complexity of the issues. See for example the case of Toyota v. The Queen
3. My company is registered for GST purposes and the tax is an "in and out" tax
Many companies believe that if their cross border tax system has been in place for a long period of time that it must be solid. Alternatively, if all of the parties in the supply chain are ITC eligible then any problems can be easily resolved at the time of audit. These are false assumptions.
Large assessments are regularly levied against US corporations including where the tax is an "in and out." In many cases ITCs were eligible to be claimed but were claimed by the wrong party (or by multiple parties). It is also common for US corporations to use various "offset" techniques to arrive at the correct bottom line GST result. Notwithstanding that there was no tax leakage in the circumstances an assessment will still be levied.
4. If there was a risk my advisor would tip me off
Good cross border advice requires a thorough understanding of (i) Canadian tax laws (ii) Canadian customs laws (iii) administrative practices of Canadian government bodies (CRA and CBSA) (iv) US shipping codes (for example the Uniform Commercial Code) (v) International shipping conventions (INCOTERMS), (v) Canadian shipping and sale of goods legislation and (vi) current cross border litigation (both existing and pending).
Advisors are not tipping off their customers. Many of the issues which are resulting in large assessments could very easily have been avoided by making only minor changes in the carriage or documentation process. But before these changes can be made the advisor needs to know where to look to identify the issue. Once the issue has been identified the advisor needs to know how to implement an effective change which does not result in the application of another trap. 
