Filtered-Insights

Draft technical amendments expand the scope of taxable Canadian property

Mon, 10 Aug 2026 00:00:00 Z

On July 23, 2026, the Department of Finance released draft legislative proposals containing numerous technical amendments to the Income Tax Act (Canada) (the Act) accompanied by explanatory notes released on July 27, 2026. Among the proposals are amendments to the definition of "taxable Canadian property" (TCP) in subsection 248(1) of the Act.

Coming into force on Royal Assent, the proposed amendments will:

modify the rules governing when units of publicly traded partnerships constitute TCP;
broaden the look-through rule found in paragraph (d) of the definition of TCP;
reinstate the deeming rule for options and interests in property that previously applied in determining whether property is TCP.

1. Publicly traded partnership units

Under the proposed amendments, paragraph (d) of the definition of TCP no longer applies to partnership units listed on a designated stock exchange.

Instead, listed partnership units are brought within paragraph (e), alongside listed corporate shares and mutual fund interests, and are now subject to the 25 per cent ownership test and the more-than-50 per cent FMV test. Unlisted partnership interests continue to be tested only under the more-than-50 per cent FMV test in paragraph (d). This generally aligns the treatment of listed partnerships with that of listed corporate shares.

The revised language appears designed to better accommodate partnership structures when applying the ownership threshold. The proposal may therefore be particularly relevant for investment funds and other collective investment vehicles.

2. Broadening of look-through rule in paragraph (d)

The proposed amendments broaden the look-through rule found in paragraph (d) of the definition of TCP by permitting value to be traced through a wider range of intermediate entities, including through any corporation, trust or partnership (other than entities described in paragraph (e)).

Non-listed shares and interests that indirectly derive more than 50 per cent of their value from underlying TCP assets may now constitute TCP even where intermediate entities are not themselves TCP. As a result, shares that are not TCP under the current rules may become TCP because more underlying Canadian property is considered in applying the more-than-50 per cent FMV test.

3. Options, rights and interests: A significant broadening

The amendments also replace the existing deeming rules found in subparagraph (d)(iv) and paragraph (f) of the TCP definition with proposed subsection 248(1.2). New subsection 248(1.2) provides that, for the purposes of the definition TCP in subsection 248(1), a property described in any of paragraphs (a) to (e) of that definition is deemed to include an option in respect of, or an interest in, or for civil law a right in, the property, whether or not the property exists.

The explanatory notes indicate that the amendment is broader in its application than subparagraph (d)(iv) and paragraph (f) of the definition (which are consequently being repealed), as it ensures that options and interests themselves can qualify as TCP while also applying for the purposes of the TCP definition as a whole. The explanatory notes provide the following example:

a taxpayer who owns 24 per cent of the shares of a corporation and holds an option to acquire an additional 1 per cent of its shares meets the 25 per cent or more ownership test under subparagraph (e)(i) of the definition due to the application of this new deeming provision; consequently, both the taxpayer's shares and the option to acquire additional shares would be TCP, provided the condition in subparagraph (e)(ii) of the definition is also met.

As a result of the proposed amendments, options to acquire shares are once again factored into the 25 per cent test and can affect whether the shares are considered TCP.

Historical context

This new subsection reinstates the deeming rule that was repealed effective Oct. 1, 1996, when the definition of TCP was located in subsection 115(1) of the Act, with options or interests being dealt with in former subsection 115(3).

Subsection 115(3) provided that references to property described in subsection 115(1) included "any interest therein or option in respect thereof, whether or not such property is in existence.” As such, in Finance’s example above, the taxpayer would have also been deemed to have met the 25 per cent ownership test under the definition of TCP found in previous subsection 115(1).

When the TCP definition was relocated from subsection 115(1) to subsection 248(1) as part of the 2001 amendments, the former subsection 115(3) rule was not carried forward in its entirety. Although portions of the concept were subsequently reflected in subparagraph (d)(iv) and paragraph (f) of the TCP definition, the statutory language no longer expressly provided that options or interests are considered in determining whether the 25 per cent ownership threshold was met.

The Canada Revenue Agency acknowledged this issue shortly after the 2001 amendments. In technical interpretation 2002-015179, the CRA noted that former subsection 115(3) was not reproduced when the TCP definition was moved to subsection 248(1), creating uncertainty regarding the treatment of options and interests in property for purposes of the TCP definition.

Viewed in this context, the addition of subsection 248(1.2) appears less like an expansion of the TCP regime and more like a restoration of a concept that existed under former subsection 115(3) before the 2001 reorganization of the Act.

Build Canada Homes’ first moves: 4,000 direct-build units and a controversial B.C. condo conversion push

Thu, 06 Aug 2026 00:00:00 Z

On Sept. 14, 2025, the Canadian government launched Build Canada Homes, a new federal agency designed to increase Canada’s housing supply by building affordable housing at scale. Build Canada Homes will work with provinces, territories, municipalities and Indigenous communities to build affordable community housing for low-income households, while also partnering with private developers to deliver affordable housing for middle-class Canadians.

The federal government introduced Bill C-20, the Build Canada Homes Act (the Act), on Feb. 5, 2026, to formalize and expand Build Canada Homes’ mandate. The Act provides the legislative framework to establish Build Canada Homes as a Crown corporation dedicated to building affordable housing at scale across Canada, with broader authority and operational flexibility.

The Act received Royal Assent on June 18, 2026, and the Government of Canada announced the milestone on June 19, 2026. Royal Assent established the framework for Build Canada Homes to transition to a Crown corporation. Further steps, including orders in council, governance implementation and leadership appointments, are required before it becomes fully operational as a Crown corporation later in 2026.

What you need to know

Build Canada Homes has moved from a policy announcement to the implementation phase, with a mandate to increase Canada’s housing supply by delivering affordable housing at scale.
Bill C-20, the Build Canada Homes Act, gives Build Canada Homes the legislative framework, authority and operational flexibility needed to transition into a Crown corporation.
Build Canada Homes’ first direct-build projects will oversee approximately 4,000 homes on federally owned sites, marking the first test of the federal government’s land-led housing strategy.
The Canada-British Columbia condo conversion project could convert more than 2,200 vacant condo units into affordable homes, but its structure, pricing and affordability conditions are still under consideration.
The Canada-British Columbia condo conversion project may include a first-of-its-kind rent-to-buy arrangement in Canada, giving Canadians who are unable to save a large enough lump sum for a down payment a new pathway to homeownership.

Federal land is the foundation of the strategy

The Canadian government provided Build Canada Homes with an initial $13 billion investment to help finance and launch affordable housing construction projects across Canada. The affordable housing projects under Build Canada Homes will utilize federal public lands as a central tool to reduce land costs, streamline construction and support affordability.

By bringing Canada Lands Company into the Build Canada Homes portfolio, Build Canada Homes has gained access to the federal government’s land portfolio, including 88 federal properties identified as suitable for housing. Build Canada Homes can lease or discount surplus and underused public lands to partners, reducing development and construction costs and supporting affordability targets.

Canada’s Housing Minister Gregor Robertson has described Build Canada Homes’ use of federal lands as a generational decision that will play a key role in ensuring everyone in Canada has a place to live.

While the majority of underused federal lands identified by the Canada Public Land Bank are in Ontario, there are public lands under consideration for project implementation across the country. As of time of publication, the Canada Public Land Bank has identified three British Columbia properties, located in Port Moody, Vernon and Vancouver, in the open-for-feedback phase.By contrast, Ontario has 46 properties under consideration, all of which are either open for feedback, accepting submissions or reviewing submissions.

Despite most of the initial opportunities being in Ontario, the government has instructed federal ministers to identify lands owned by their departments that may be suitable for housing construction beyond the 88 federal properties listed on the Canada Public Land Bank. As federal ministers continue to identify underused public lands, more opportunities to build affordable housing may arise in British Columbia.

From policy to projects: Build Canada Homes starts building

Build Canada Homes has begun implementing its strategy to optimize federal lands through six initial direct-build projects expected to deliver approximately 4,000 homes on federally owned sites.

As the planning process for the initial six build projects continues, Build Canada Homes is now selecting partners for the projects, with a focus on partnerships that prioritize Canadian resources, support Canadian industries and create high-paying careers across Canada.

The first six projects include:

Arbo (Toronto): 540 new homes on a portion of the site at Arbo Downsview in Toronto.
Naawi-Oodena (Winnipeg): A partnership between Treaty One First Nations and Canada Lands Company to deliver 320 new homes.
Village at Griesbach (Edmonton): 355 new homes on the northeast corner of the Village of Griesbach.
Pointe-de-Longueuil (Québec): 1,055 new homes located on the St. Lawrence River waterfront in the City of Longueuil.
Heron Road (Ottawa): Approximately 1,100 new homes on the 18-acre federal site 20 minutes outside downtown Ottawa.
Shannon Park (Dartmouth): Approximately 630 new homes on a dedicated parcel.

While the six initial build sites represent a meaningful first step to increase the supply of affordable housing in Canada, B.C. Housing Minister Christine Boyle has encouraged the Canadian government to implement similar direct-build projects in British Columbia. By using available federal properties in the Canada Public Land Bank, and continuing to identify new surplus federal properties, the hope is to see new affordable housing built directly in British Columbia.

In addition to the direct-build projects, Build Canada Homes has secured large-scale partnerships across the nation, including with the City of Ottawa, the provinces of British Columbia, Québec and Nova Scotia, and, through a tripartite agreement, with Nunavut and Nunavut Tunngavik Inc.These partnerships aim to generate capital investment, adopt modern construction practices, accelerate approvals and permitting, and reduce delivery costs.

For example, Build Canada Homes and the City of Ottawa are working together to support 3,000 new mixed-income and affordable homes, with construction supported by up to $400 million in federal and municipal contributions. The City of Ottawa has also committed to waiving fees, expediting approval and permitting processes, and providing property tax exemptions to help reduce costs and maintain affordability for residents.

In British Columbia, Build Canada Homes is exploring partnership opportunities through the Canada-British Columbia Partnership on Condo Conversion project (British Columbia condo conversion project). While the British Columbia condo conversion project is an opportunity to increase the supply of affordable housing in Canada, the initiative has attracted more public scrutiny than some of the other announced partnerships.

B.C.’s condo conversion project: Housing tool or developer bailout?

Under the British Columbia condo conversion project, launched on June 18, 2026, the federal and British Columbia governments aim to use financing tools to convert more than 2,200 vacant condo units into affordable homes through Build Canada Homes and BC Housing.

The proposal has drawn criticism from some commentators as a potential developer bailout that will artificially prop up housing prices rather than allow market forces to drive prices down to what Canadians can afford. However, some commentators are optimistic about the initiative, suggesting it could be a practical way to convert existing unsold inventory into affordable housing if the acquisition terms are appropriately structured.

While the details of the acquisition structure are still under consideration, the federal government has stated the condos will be purchased at below-market rates, ideally below the cost of construction. The federal government has also noted that the condos will not be purchased in the City of Vancouver, but rather that the acquisition will focus on regions where the economics work, such as the Fraser Valley, Okanagan and Vancouver Island.

As part of the condo conversion proposal, Prime Minister Mark Carney recently announced that the plan will include a rent-to-buy program aimed at supporting Canadians who are unable to save a large enough lump sum for a down payment. This suggests that at least some converted condo units will be used not only as rental housing, but also as a pathway to eventual homeownership.

Rent-to-buy arrangements typically require monthly payments to the property owner, with a portion of each payment, often called a rent credit, applied toward a future down payment. The occupant may then have an option to purchase the home on an agreed future date without providing the full down payment upfront.

To date, the federal and British Columbia governments have provided limited information about the specific structure of the British Columbia condo conversion project. As more details become available, developers, lenders and British Columbians will have a clearer picture of the project’s implications for affordable housing in Canada.

What to watch next

Taken together, the six initial direct-build projects and announced partnerships appear to be only the beginning. Build Canada Homes is actively accepting and reviewing affordable development project applications on an ongoing basis through the Build Canada Homes portal, creating new opportunities for lenders, municipalities and developers to participate.

The Commercial Real Estate Group at BLG will continue to monitor federal government updates and advise clients on how to leverage and participate in Build Canada Homes programs. If you have any questions, please reach out to BLG’s Commercial Real Estate lawyers.

Ontario Court of Appeal rules on ESA termination clauses: The Baker and Li decisions

Thu, 06 Aug 2026 00:00:00 Z

Two recent Ontario employment law decisions, Baker v. Van Dolder’s Home Team Inc., 2025 ONSC 952, and Li v. Wayfair Canada ULC, 2025 ONSC 2959, have renewed scrutiny of termination provisions that limit employees to minimum statutory entitlements under the Employment Standards Act, 2000 (the ESA). Although both cases address “ESA only” drafting, the lower courts had reached opposing conclusions. Both appeals were argued on March 25, 2026, and the Court of Appeal decisions provide clear guidance for employers.

Why these appeals matter

Employers have increasingly attempted to craft “ESA only” termination provisions to limit exposure to common law notice. However, inconsistent trial decisions have made it difficult to predict when such clauses will be enforced. Taken together, the Baker and Li Court of Appeal decisions provide much needed certainty in Ontario employment law regarding termination clause drafting.

Baker v. Van Dolder’s Home Team Inc.

Background and lower court decision

In Baker, the Ontario Superior Court considered a wrongful dismissal claim arising from a termination without cause. The employer relied on contractual termination provisions that limited the employee’s entitlements to ESA minimums.

Termination clauses in issue (excerpts)

“Termination without cause: we may terminate your employment at any time, without just cause, upon providing you with only the minimum notice, or payment in lieu of notice and, if applicable, severance pay, required by the Employment Standards Act. If any additional payments or entitlements, including but not limited to making contributions to maintain your benefits plan, are prescribed by the minimum standards of the Employment Standards Act at the time of your termination, we will pay same. The provisions of this paragraph will apply in circumstances which would constitute constructive dismissal.”

“Termination with cause: we may terminate your employment at any time for just cause, without prior notice or compensation of any kind, except any minimum compensation or entitlements prescribed by the Employment Standards Act. Just cause includes the following conduct: (a) Poor performance, after having been notified in writing of the required standard; (b) Dishonesty relevant to your employment (such as misleading statements, falsifying documents and misrepresenting your qualifications for the position you were hired for); (c) Theft, misappropriation or improper use of the company’s property; (d) Violent or harassing conduct towards other employees or customers; (e) Intentional or grossly negligent disclosure of privileged or confidential information about the company; (f) Any conduct which would constitute just cause under the common law or statute.”

The lower court had held that both the “without cause” and “with cause” provisions were unenforceable because the repeated use of “at any time”, together with the agreement’s definition of “just cause,” suggested an absolute right to terminate that is inconsistent with the ESA’s restrictions (including prohibitions on termination in certain circumstances, such as during statutory leaves or in reprisal). Relying on Dufault v. Township of Ignace and Waksdale v. Swegon North America Inc., the court concluded that:

A termination clause that misstates the ESA cannot be saved by general ESA compliance language.
The phrase “at any time” incorrectly conveys that an employer’s right to terminate is absolute.
Because one part of the termination regime was unenforceable, the entire termination provision failed, entitling the employee to common law reasonable notice.

Issues on appeal

The appeal in Baker raises issues of broader significance for Ontario employers and employees. As recognized by the Court of Appeal in granting leave to intervene in Baker v. Van Dolder’s Home Team Inc., 2025 ONCA 578 and 2025 ONCA 829, the appeal engages:

Whether contractual language allowing termination “at any time” necessarily violates the ESA;
How strictly courts should scrutinize termination provisions that purport to limit employees to statutory minimums;
The continued scope and application of Waksdale in ESA based termination clause analysis; and
The proper balance between the ESA’s remedial purpose and commercial certainty in employment contracting.

Appeal decision

The Ontario Court of Appeal allowed the employer’s appeal, overturning the lower court decision. The Court found that both the without cause and with cause provisions were ESA compliant. The without cause clause clearly stated that the employee would receive all of their minimum ESA entitlements, and was therefore enforceable. Similarly, the with cause provision remained enforceable because it preserved “any minimum compensation or entitlements prescribed by the ESA”, even though the contractual cause definition was broader than the ESA’s wilful misconduct standard.

Li v. Wayfair Canada ULC

Background and lower court decision

The lower court in Li had reached a different conclusion on similar issues. Mr. Li, a senior employee with less than one year of service, was terminated and paid the ESA minimum of one week’s notice. He challenged the enforceability of his employment agreement’s termination provisions, arguing that they improperly restricted him to statutory entitlements.

Termination clauses in issue (excerpts)

“Termination for Cause: The Company may terminate your employment at any time for Cause without notice, pay in lieu of notice, severance, benefits continuance or other compensation or damages of any kind, unless expressly required by the ESA in which case only the minimum statutory entitlements will be provided.”

“Definition of ‘Cause’: For all purposes in this letter, ‘Cause’ means any wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the company and that constitutes ‘cause’ under the ESA.”

“Termination Without Cause: After your probationary period concludes, in the absence of Cause, the Company may terminate your employment at any time and for any reason by providing you with only the minimum statutory amount of written notice required by the ESA or by paying you the minimal amount of statutory termination pay in lieu of notice required by the ESA, or a combination of both, as well as paying statutory severance pay required by the ESA, providing benefits continuance for the requisite minimum statutory period under the ESA and all other outstanding entitlements, if any, owing under the ESA.”

In contrast to the lower court in Baker, the lower court in Li upheld the termination clauses, emphasizing that the agreement repeatedly anchored entitlements to ESA minimums and defined “Cause” by reference to the ESA “wilful misconduct” standard. Reading the agreement as a whole, the lower court emphasized that:

The contract repeatedly and expressly tied both “for cause” and “without cause” terminations to ESA standards;
The definition of “Cause” was expressly aligned with the ESA “wilful misconduct” standard;
Unlike in Dufault and Baker, the agreement did not misstate the ESA or omit required categories of entitlements; and
Courts should not invalidate otherwise compliant agreements merely because they restrict employees to statutory minimums, provided the drafting is clear and accurate.

As a result, the plaintiff was limited to ESA entitlements and denied common law reasonable notice.

Issues on appeal

The appeal in Li raised similar issues in Baker, including:

Whether courts may uphold termination clauses that clearly and consistently defer to ESA minimums when read as a whole;
The extent to which “at any time” and “for any reason” language is fatal when coupled with detailed ESA compliance wording elsewhere in the contract; and
How appellate courts should reconcile seemingly divergent trial level authority on termination clause enforceability.

Appeal decision

The Ontario Court of Appeal dismissed the employee’s appeal. The Court upheld the without cause provision because it repeatedly confirmed that the employee would receive no less than the minimum entitlements required by the ESA. The Court of Appeal held that on a plain reading, it was clear that the employer and employee agreed that the employee would receive their ESA entitlements on termination of employment, and therefore there was no reason to hold the clause unenforceable. The phrases “at any time” and “for any reason” were not contrary to law, as they simply restated an employer’s right to terminate the employment relationship, and did not suggest that the employer could do so unlawfully.

The Court declined to revisit Waksdale, because it found the termination provisions in both contracts were enforceable.

Practical takeaways for employers (post appeal)

The decisions clarify that courts should not invalidate termination clauses by straining to find hypothetical ESA inconsistencies. The focus is on whether the clause, read contextually, objectively preserves ESA minimum standards.

The Ontario Court of Appeal decision in Baker and Li clarifies when “ESA-only” termination language will be enforced. Employers reviewing or drafting termination provisions should consider:

Ensuring that the contract complies with ESA minimums in all termination scenarios (both without cause and for cause).
Using clear language showing an objective intention to comply with the ESA.
Not relying on “at any time” or “for any reason” as permission to terminate unlawfully.
Ensuring with cause clauses preserve ESA entitlements unless the ESA wilful misconduct standard is met.

Bottom line: employers may use termination clauses to limit employees to ESA minimums, but only if the agreement, read as a whole, clearly preserves ESA entitlements in all circumstances, and does not purport to authorize terminations or forfeitures prohibited by employment standards, health and safety, human rights, or other protective statutes.

Armed with this new guidance from the Court of Appeal, now is the time to review the termination provisions in your employment contracts.

CCAA vesting orders and Crown royalty arrears: Alberta Court of Appeal confirms finality

Tue, 04 Aug 2026 00:00:00 Z

In Alberta (Energy and Minerals) v Spartan Delta Corp,¹ the Court of Appeal held that Alberta Energy’s claims for both pre-filing and post-filing royalty arrears under leases sold subject to a CCAA vesting order were barred by operation of the joint, but not several, liability created under the Mines and Minerals Act, RSA 2000, c M-17 (MMA) and the wording of the vesting order.

Spartan has important implications and provides much-needed clarity respecting the liability exposure of co-lessees to oil and gas leases.

How the Bellatrix CCAA sale led to Crown royalty arrears claims

This appeal is rooted in the CCAA proceedings surrounding Bellatrix Exploration Ltd. (Bellatrix). Bellatrix was an oil and gas company that held interests as a co-lessee in various Crown petroleum and natural gas leases (the Leases). Canadian Natural Resources Limited (CNRL) was the other co-lessee in the Leases.

During the CCAA proceedings, Bellatrix sold its interests in the Leases to Spartan Delta Corp. (Spartan). The sale to Spartan was approved under an Approval and Vesting Order (the Vesting Order) granted by the Court and the Leases were transferred free and clear of all claims save for limited permitted encumbrances. Bellatrix remained liable for any royalty arrears that arose in the period between the commencement of the CCAA proceedings and the closing date of the sale of the Leases to Spartan in June 2020. An $8.5 million holdback was retained by the CCAA monitor to cover any post-filing claims. The CCAA proceedings were terminated in summer 2022.

Under the MMA, there is a 5½-year period in which royalty amounts are subject to recalculation by Alberta Energy. In November 2024, more than four years after the closing of the sale of the Leases, Alberta Energy issued notices to Spartan and several co-lessees, including CNRL, demanding payment of both pre-filing and post-filing royalty arrears. Spartan, CNRL and the monitor sought relief under the Vesting Order precluding the claims.

What the Alberta Court of Appeal decided on CCAA vesting orders

A. Why pre-filing royalty arrears were barred

The Court of Appeal held that Alberta Energy was not entitled to the pre-filing arrears.

The Court of Appeal held that liability under an MMA lease is joint, not joint and several. Unlike joint and several liability, where each party individually assumes an identical obligation, if joint liability is extinguished for one party it is extinguished for all.

Having determined that the extinguishment of Bellatrix’s liability for pre-filing arrears would extinguish the liability of any co-lessee, the court turned to the wording of the Vesting Order. On the plain language of the Vesting Order, the court found that royalty arrears were intended to be among the claims expunged when Bellatrix’s interests in the Leases were transferred free and clear to Spartan.

In the result, the court held that the Vesting Order barred the claims for pre-filing royalty arrears.

B. Why post-filing royalty arrears were barred

For the post-filing arrears, the Court of Appeal emphasized that Alberta Energy had notice of the holdback but did not claim from it during the CCAA process. Rather, as the CCAA proceedings had concluded, Alberta Energy had informed the monitor that Bellatrix’s royalty deposit was sufficient and that the estate could be closed.

The Court of Appeal found that the CCAA process provided a mechanism for the recovery of post-filing royalty arrears, and Alberta Energy did not use that mechanism or attempt to create a mechanism for possible future royalty adjustments.

In this context, the court held that Alberta Energy’s post-CCAA collection efforts undermined the integrity and finality of the CCAA process and offended fundamental principles of fairness. The court emphasized the “single proceeding” model for insolvency proceedings in its reasons.

Key takeaways for oil and gas co-lessees in CCAA proceedings

The Court of Appeal’s decision demonstrates the intended finality and certainty of CCAA approval and vesting orders and reinforces the importance for any affected stakeholder to participate in settling the terms of the order. The decision also provides a practical demonstration of the effect of the court’s related holding that the MMA creates only joint liability for co-lessees to Crown mineral leases. Provided that the vesting order is appropriately drafted, solvent co-lessees are provided with certainty that historical arrears are extinguished.

Cliquez à vos risques et périls : avis du personnel des ACVM sur les pratiques de cybersécurité

Fri, 31 Jul 2026 00:00:00 Z

Le 15 juillet 2026, les Autorités canadiennes en valeurs mobilières (ACVM) ont publié l’avis 33-322 du personnel, Examen des pratiques de cybersécurité des sociétés inscrites et indications supplémentaires (l’avis du personnel), à la suite d’inspections ciblées des pratiques de cybersécurité de 73 sociétés inscrites. Son contenu n’a rien de surprenant : la cybersécurité constitue un risque opérationnel majeur et les sociétés inscrites doivent mettre en place des mesures de contrôles concrètes, documentées et régulièrement mises à jour, adaptées à leur taille, à leur complexité et à leurs activités.

Points à retenir

Adaptez votre programme de cybersécurité à votre taille. Les petites et moyennes sociétés n’ont pas besoin d’une aussi grande infrastructure que celle d’une banque, par exemple, mais elles doivent tout de même se prémunir contre d’importants risques et rendre compte de leurs efforts.
Intégrez les procédures de cybersécurité à votre calendrier de conformité : révision des politiques, formation, évaluation des risques, examen des fournisseurs, essais du plan d’intervention en cas d’incident et tests de sauvegarde.
Conservez des preuves. Les ACVM mentionnent à maintes reprises la documentation, notamment les examens, les registres de formation, les évaluations des risques, le contrôle diligent des fournisseurs, les essais et les suivis.
Considérez les incidents impliquant des tiers comme vous touchant aussi. Si un fournisseur détient des données de votre société ou de vos clients, une fuite pourrait rapidement devenir un problème pour vous sur les plans réglementaire, contractuel ou de la communication avec les clients.
N’attendez pas qu’un incident se produise pour déterminer qui fait quoi. Testez votre plan d’intervention pendant une période calme.

Comme l’indique l’avis du personnel, les incidents de cybersécurité présentent un risque commercial pour les sociétés inscrites et un risque pour les données confidentielles de leurs clients en leur possession. Autrement dit, « nous pensions que les TI s’en étaient chargées » n’est pas vraiment une réponse acceptable.

Cinq pratiques de cybersécurité attendues

1. Des politiques adaptées à la réalité. Les sociétés devraient se doter de politiques et de procédures de cybersécurité écrites qui traitent des enjeux évidents : communications électroniques, appareils de la société et du personnel, accès à distance, protection et chiffrement des données, mises à jour logicielles, supervision des fournisseurs, formation, responsabilisation et signalement des incidents. Comme pour de nombreuses autres politiques, les ACVM s’attendent à ce que celles sur la cybersécurité soient révisées annuellement et qu’elles correspondent aux procédures ayant réellement cours. D’après notre expérience, il est judicieux d’évaluer les politiques, les contrôles, la gouvernance et l’établissement de rapports en fonction d’attentes véritables et de se baser sur les procédures de communication de crise, de continuité des activités, de reprise après sinistre et d’escalade déjà en vigueur. De plus, les guides d’intervention en cas d’incident devraient comporter des arbres décisionnels, un processus de signalement, ainsi que des protocoles de documentation et de conservation des preuves. Pour ce qui est des mots de passe…

2. Un programme d’apprentissage qui porte ses fruits. Une formation axée spécifiquement sur la cybersécurité devrait être donnée pendant le processus d’intégration des recrues, puis au moins une fois par année ensuite. Des rappels plus fréquents peuvent s’avérer nécessaires, selon le profil de risque de la société. Le contenu devrait porter sur l’hameçonnage et le piratage psychologique, les renseignements confidentiels, les mots de passe, la sécurité des appareils, ainsi que les situations dans lesquelles il faut signaler un incident et la manière de le faire. Il convient par ailleurs de tenir des registres des personnes ayant participé, de la date et des sujets abordés. Les simulations d’hameçonnage documentées sont pratiquement obligatoires et les membres du personnel qui ne les réussissent pas doivent faire l’objet d’un suivi ciblé.

3. Des évaluations de risques accompagnées de contrôles concrets. Les sociétés auraient avantage à mener et documenter leurs évaluations des risques de cybersécurité au moins une fois par année. Celles-ci doivent permettre de repérer les actifs critiques et les données confidentielles, les vulnérabilités internes et externes, les menaces, les conséquences potentielles et l’efficacité des contrôles mis en place. Le personnel des ACVM s’attend à ce que ces évaluations soient non seulement documentées, mais qu’elles prouvent aussi que tous les aspects essentiels ont été pris en compte. Parmi les priorités des ACVM, mentionnons les risques et les contrôles liés aux droits d’accès, notamment les accès en fonction du poste, le principe du droit d’accès minimal, la révocation rapide des droits d’accès et les examens périodiques. Les sociétés qui font appel à des tiers pour ces évaluations doivent remédier à toute lacune relevée et expliquer comment elles comptent répondre aux préoccupations soulevées. Les solutions de base possibles comprennent l’authentification multifacteur, les VPN, le chiffrement des données, les sauvegardes programmées du système, le filtrage des courriels, l’application de correctifs et la mise à jour des logiciels, la tenue de registres des activités numériques suspectes et la suppression sécuritaire des données. Le personnel souligne que les audits de cybersécurité et les tests d’intrusion, bien qu’ils ne soient pas obligatoires, constituent des pratiques efficaces.

4. Une surveillance des fournisseurs qui ne se limite pas à penser : « C’est une grande entreprise, donc tout va bien aller. » Toutes les sociétés examinées par les ACVM faisaient affaire avec des tiers fournisseurs de services ayant accès à leur système et à leurs données. Les ACVM s’attendent à ce qu’un contrôle diligent documenté soit effectué avant l’intégration d’un tiers, puis périodiquement par la suite. Il est important de comprendre comment les fournisseurs protègent les données, où elles sont stockées, comment l’accès est contrôlé et comment les responsabilités sont réparties dans les environnements infonuagiques. Nous conseillons souvent aux sociétés de renforcer leurs exigences contractuelles et de mettre à jour certains éléments, comme les contrôles liés à la cybersécurité, les avis d’incident, les droits d’audit, la sous-traitance et la gestion des données. Les rapports sur les contrôles des systèmes et de l’organisation SOC 2 ou autres documents semblables sont utiles, lorsque disponibles, mais ils doivent tout de même être revus.

5. Un plan d’intervention qui a été mis à l’essai avant qu’il ne soit trop tard. Les sociétés devraient rédiger un plan d’intervention qui comprend une définition claire de ce qu’est un cyberincident, une description des différents types de cyberattaques possibles et des mesures à prendre en cas de piratage des systèmes d’un tiers fournisseur de services qui détient des données de la société, les rôles et les responsabilités pour les notifications, les procédures d’escalade, etc. Ce plan doit être testé régulièrement au moyen de simulations. Un exercice bien conçu consiste en un scénario de rançongiciel ou de cyberincident réaliste qui fait intervenir différentes étapes décisionnelles au sein des TI, de la haute direction et du conseil d’administration. Des essais de sauvegarde et de récupération des données devraient aussi être consignés. Bien que l’assurance cybersécurité ne soit pas obligatoire, les ACVM notent qu’elle peut être utile sur les plans financier et opérationnel.

BLG peut vous aider

L’IA dans les soins de santé canadien : du projet pilote à l’adoption

Thu, 30 Jul 2026 00:00:00 Z

L’utilisation de l’intelligence artificielle au service des soins de santé a franchi une nouvelle étape au pays. Nous avons récemment accueilli des leaders du secteur de la santé, des représentants d’hôpitaux, des entrepreneurs en technologie et d’autres parties prenantes lors d’un symposium sur l’IA dans le milieu de la santé canadien à Toronto.

Les discussions ont mis en évidence un changement clair dans la façon dont les organismes de soins de santé abordent l’IA. Il y a un an, les conversations tournaient autour de l’expérimentation et des cas d’utilisation. Cette année, l’attention se portait bien plus sur la mise en œuvre, la gouvernance, l’approvisionnement, la responsabilisation et l’expansion. Nous avons notamment beaucoup entendu que l’IA amorçait une nouvelle phase dans le secteur.

De l’expérimentation à l’adoption

La question n’est plus de savoir si l’IA peut être utilisée. On procède déjà à des essais, des évaluations et des déploiements un peu partout dans les milieux cliniques, opérationnels et administratifs. Ce qu’il reste à déterminer est comment les organismes de soins de santé peuvent mettre en place, gérer et optimiser ces outils de manière sécuritaire, fiable, viable et juridiquement défendable.

Pendant les 12 à 24 prochains mois, les hôpitaux, les autorités sanitaires, les entreprises du secteur, les assureurs et les fournisseurs de technologies de la santé se concentreront probablement moins sur les capacités technologiques que sur la gouvernance, la responsabilisation, l’approvisionnement, la protection de la vie privée et la rigueur dans la mise en œuvre.

L’adoption de l’IA s’accélère, mais son déploiement à grande échelle tarde à suivre

Un nombre croissant d’organismes de soins de santé canadiens envisagent de recourir à l’IA pour les aider avec tout ce qui touche la documentation, les flux de travail et de la patientèle, le triage, les diagnostics, les examens d’imagerie et la prise de décisions opérationnelles. L’IA ne se limite plus à la recherche ou à des projets pilotes isolés.

Cependant, le déploiement généralisé de cette technologie dans le système de santé tarde à se faire.

Plusieurs organismes ont cerné des cas d’utilisation prometteurs et mené des essais concluants. Par contre, ils sont bien moins nombreux à avoir intégré complètement l’IA dans leurs activités quotidiennes d’une manière évolutive, reproductible et qui inspire confiance au personnel médical, à la patientèle et à la direction.

Cet écart est en train de devenir l’un des principaux défis auxquels sont confrontés les organismes de soins de santé. Les obstacles sont rarement d’ordre purement technique. Le plus souvent, les organisations sont confrontées à des défis liés aux structures de gouvernance, aux modèles d’approvisionnement, aux obligations de protection de la vie privée, aux cadres de responsabilisation, à la planification de la mise en œuvre et à la préparation organisationnelle.

Les organismes de soins de santé ne se demandent donc plus forcément si l’IA fonctionne, mais plutôt s’ils peuvent la mettre en œuvre en toute confiance dans le contexte actuel.

Pourquoi est-ce important maintenant?

L’état du réseau de la santé en ce moment rend la conversation sur l’IA plus pertinente que jamais.

Partout au Canada, les organismes de soins de santé continuent de faire face à d’importantes pressions sur leurs effectifs, à un lourd fardeau administratif, à l’épuisement professionnel de leur personnel et à des défis d’accès aux soins. Ainsi, plusieurs organismes considèrent l’IA non pas comme une initiative technologique, mais comme une occasion susceptible de leur permettre de surmonter une foule d’obstacles. Ce sentiment d’urgence est l’une des raisons qui expliquent l’importance des discussions sur la mise en œuvre, la gouvernance et la responsabilisation.

Dans ces circonstances, l’IA est vue comme un moyen de réduire la charge en matière de documentation, de faciliter les processus cliniques, d’améliorer l’efficacité opérationnelle et d’aider la prise de décision.

Cela dit, l’adoption de nouvelles technologies dans le réseau de la santé ne se fait pas aussi simplement que dans certains autres secteurs.

Le déploiement de l’IA pourrait avoir des répercussions sur les soins prodigués à la patientèle, le jugement clinique, les droits de la protection des renseignements personnels, la responsabilité des établissements et la confiance du public. Les décisions quant à la mise en œuvre ont donc des conséquences différentes de celles qu’elles pourraient avoir dans d’autres secteurs.

C’est entre autres pourquoi la gouvernance est maintenant au cœur des discussions.

La gouvernance devient une condition préalable à la croissance

Un thème récurrent tout au long du symposium était que la gouvernance ne doit plus être une arrière-pensée.

La gouvernance s’impose de plus en plus comme le lien entre des projets pilotes réussis et une mise en œuvre durable.

Les organismes de soins de santé doivent répondre à une série de questions fondamentales :

Qui approuve la mise en place d’un système d’IA?
Quelles données probantes faut-il fournir avant la mise en œuvre?
Qui est responsable lorsque des problèmes surviennent?
Comment les systèmes seront-ils surveillés au fil du temps?
Dans quels cas faut-il suspendre, réentraîner, modifier ou abandonner un système?
Comment faut-il consigner et gérer les incidents, les presque exemples et les résultats imprévus?

La gouvernance porte donc de moins en moins sur l’élaboration de politiques et de plus en plus sur la mise en place de structures opérationnelles qui favorisent une utilisation responsable de l’IA tout au long du cycle de vie d’une organisation.

Les organismes qui ne parviennent pas à répondre à ces questions pourraient avoir de la difficulté à aller au-delà des cas d’utilisation isolés, quelles que soient les capacités de la technologie sous-jacente.

La protection de la vie privée et la gouvernance des données demeurent fondamentales

On ne peut aborder la question de l’IA dans les soins de santé sans parler de respect de la vie privée et de gouvernance des données. Le sujet est d’autant plus d’actualité, puisque le Canada a récemment déposé le projet de loi C-36, Loi visant à protéger la vie privée et les données des consommateurs, qui remplacerait la Loi sur la protection des renseignements personnels et les documents électroniques à titre de régime fédéral de la protection de la confidentialité dans le secteur privé; BLG a publié un guide détaillé sur les modifications proposées.

La mise en œuvre de l’IA soulève souvent des enjeux relatifs aux renseignements sur la santé, à la dépersonnalisation, au consentement, à l’accès des fournisseurs, à la cybersécurité, à l’utilisation secondaire des données et au risque de réidentification.

Les organismes de soins de santé qui explorent des solutions d’IA particulièrement complexes doivent trouver un équilibre entre leurs objectifs d’innovation, leurs obligations légales et les attentes du public.

Il est important de noter que les enjeux de gouvernance vont au-delà de la conformité. La confiance du public demeure un facteur essentiel à l’adoption réussie de l’IA. Les organismes de soins de santé doivent être capables d’expliquer comment les données sont utilisées, quelles mesures de protection sont en place et comment la responsabilité est répartie tout au long du déploiement.

La confiance n’est pas simplement une question de communication; il s’agit d’une exigence opérationnelle.

La discussion sur les normes de diligence commence

L’une des discussions les plus intéressantes de tout le symposium a porté sur l’évolution de la relation entre l’IA et les normes de diligence.

Par le passé, les préoccupations ont principalement porté sur les risques associés à une dépendance excessive aux résultats générés par l’IA. Évidemment, le personnel médical demeure responsable de l’exercice de son jugement professionnel et de ses décisions cliniques.

Une autre question pourrait se poser maintenant que l’adoption de l’IA se généralise.

Si plusieurs outils gagnent en précision et en fiabilité et qu’ils deviennent plus généralement acceptés dans la pratique clinique, le fait de ne pas tenir compte de certains outils d’IA déjà largement reconnus ne crée-t-il pas une catégorie de risque distincte?

Même si la législation canadienne n’a pas encore offert de réponses définitives, les organisations devraient s’attendre à ce qu’une attention accrue soit accordée aux interactions entre l’IA et les obligations professionnelles, la prise de décision clinique et la gestion des risques institutionnels.

Cette question revêtira assurément une importance croissante à mesure que l’IA passe du stade expérimental à celui d’une adoption à plus grande échelle.

Les achats et les contrats se rapportant à l’IA deviennent des enjeux stratégiques

Un autre point à retenir du symposium est que bon nombre de risques liés à l’IA sont, en fin de compte, gérés ou créés par le biais d’ententes contractuelles.

Les organismes de soins de santé accordent souvent la priorité à la fonctionnalité d’un outil proposé. Les modalités régissant la mise en œuvre, la maintenance, la mise à jour, la surveillance et le soutien de ce dernier au fil du temps sont toutefois tout aussi importantes.

Les organisations devraient examiner attentivement les éléments suivants :

répartition des responsabilités;
obligations de respect de la vie privée et de sécurité;
propriété des données et utilisations autorisées;
responsabilité de mise en œuvre;
attentes de rendement;
droits d’audit et de signalement;
obligations relatives à la mise à jour des modèles, aux fonctionnalités et au réentraînement;
interruptions de service et interventions en cas d’incident;
exigences de gouvernance et de surveillance.

L’évolution des systèmes d’IA fait en sorte que les ententes d’approvisionnement, plutôt que de se limiter à l’acquisition de logiciels, doivent également prendre en considération la gestion du cycle de vie.

La conclusion de contrat est donc un aspect stratégique de la gouvernance de l’IA, pas simplement une tâche administrative.

Cinq questions pratiques pour les organismes de soins de santé

Alors que les organismes de soins de santé évaluent leurs projets d’IA, les équipes de direction devraient se poser les questions suivantes :

Quel problème voulons-nous régler?
Quelle structure de gouvernance supervisera la mise en œuvre et l’utilisation à long terme?
Comment les risques ayant trait à la protection de la vie privée, la gouvernance des données et la cybersécurité seront-ils pris en compte?
Quelles mesures de protection contractuelles sont nécessaires pour gérer les risques de manière appropriée?
Comment l’organisation évaluera-t-elle le rendement, assurera-t-elle le suivi des résultats et réagira-t-elle aux problèmes après le déploiement?

Les organismes capables d’apporter des réponses pertinentes à ces questions seront bien positionnés pour passer de la phase d’expérimentation à une mise en œuvre durable.

Une approche multidisciplinaire est essentielle

Les enjeux entourant l’IA dans le réseau de la santé relèvent rarement d’une seule discipline juridique ou opérationnelle.

Ils touchent souvent simultanément au droit de la santé, à la protection de la vie privée, à la cybersécurité, à l’approvisionnement en technologies, à la conformité réglementaire, à la gouvernance, à l’assurance, aux risques de litiges et à la gestion des risques d’entreprise.

Au lieu d’aborder un seul enjeu de façon isolée, les organisations ont besoin de conseils englobant différents points de vue.

Chez BLG, nos équipes Droit de la santé, Cybersécurité et respect de la vie privée, Technologies, Droit des sociétés et droit commercial, Réglementation en matière de santé et Litiges travaillent ensemble pour aider les organismes de soins de santé à analyser leurs projets d’IA sous différents angles, qu’il s’agisse d’évaluer les cadres de gouvernance, de négocier des ententes d’approvisionnement, d’examiner les obligations de protection des renseignements personnels, d’élaborer des politiques de mise en œuvre ou de gérer les risques opérationnels et cliniques.

Regard vers l’avenir

S’il y a bien une chose à retenir du symposium de BLG sur l’IA dans le milieu de la santé canadien, c’est que cette technologie est passée de l’abstrait au concret.

Les organisations qui réussiront au cours des 12 à 24 prochains mois ne seront pas nécessairement celles qui adopteront l’IA en premier, mais plutôt celles qui parviendront à la gérer, à l’expliquer, à en assurer la surveillance et à en assumer la responsabilité une fois qu’elle fera partie intégrante des activités quotidiennes, en plus de collaborer efficacement avec des tiers.

À mesure que les organismes de soins de santé passent de l’étape de l’expérimentation à celle du déploiement, la capacité à encadrer, à surveiller et à gérer l’IA fera la différence entre les initiatives couronnées de succès et celles qui échouent. BLG continuera de collaborer avec les hôpitaux, les organismes de soins de santé, les entreprises de technologie et les autres acteurs du secteur pour les aider à relever les défis juridiques, réglementaires, opérationnels et de gouvernance qui accompagnent cette nouvelle phase d’adoption de l’IA.

Communiquer avec les personnes qui ont rédigé le présent article ou l’une des personnes-ressources dont le nom figure ci-après pour discuter de l’incidence que pourraient avoir sur votre organisation les enjeux de gouvernance de l’IA, d’approvisionnement et de respect de la vie privée ou les risques cliniques.

Nous vous invitons également à vous abonner à notre bulletin sur l’IA et les soins de santé (en anglais seulement).

McCarthy v. Bison Transport: Ontario court upholds just cause dismissal

Thu, 30 Jul 2026 00:00:00 Z

In McCarthy v. Bison Transport Inc., 2026 ONSC 3729, the Ontario Superior Court of Justice upheld a termination for just cause arising from an employee’s second failed drug test. The decision highlights the importance of clear workplace policies, consistent enforcement, and the limits of the duty to accommodate in the absence of an actual or perceived substance-dependency disability.

Key takeaways for employers on just cause dismissal

McCarthy v. Bison Transport Inc. confirms that employers in safety sensitive industries may rely on breaches of drug and alcohol policies as grounds for just cause termination, provided those policies are clearly communicated to employees, consistently enforced and impose consequences proportionate to the breach.

Employers may rely on a positive drug test to support termination where an employee knowingly violates a valid workplace policy.
The duty to accommodate does not apply where there is no actual or perceived substance-dependency disability.
Where an employee has, or is perceived to have, a substance-dependency disability, employers must accommodate to the point of undue hardship.
Clear documentation, signed acknowledgements and prior warnings can help employers show employees understood the policy and the consequences of breaching it.
Good faith, transparent termination processes can help reduce the risk of aggravated and punitive damages.

Background: failed drug tests and workplace policy enforcement

Mr. McCarthy worked for Bison Transport, a federally regulated employer, for four years as a long-haul driver. When he was hired, Mr. McCarthy attended mandatory training and signed an acknowledgement confirming his understanding that violations of Bison Transport’s Drug and Alcohol Policy (the Policy) could result in disciplinary action, including termination.

In November 2014, Mr. McCarthy failed a random drug test administered in accordance with Bison Transport’s Drug and Alcohol Testing Procedures. Bison Transport placed Mr. McCarthy on an unpaid leave of absence and required him to complete a return-to-work program, including educational programming and testing requirements. Later that month, Mr. McCarthy returned to work, undergoing further random drug testing, which he passed. Following his return to work, Mr. McCarthy signed a written warning expressly advising that any future failed drug or alcohol tests could result in his immediate termination.

In October 2017, Mr. McCarthy failed a second drug test. During a subsequent meeting, he again acknowledged the Policy and his understanding that a second violation could lead to his termination. Bison Transport terminated his employment for cause with immediate effect.

Mr. McCarthy commenced a wrongful dismissal action. The Ontario Superior Court of Justice dismissed his claim, holding that his termination was justified under the Policy, which was found to be a reasonable one for employees in safety sensitive positions.

The Ontario Superior Court of Justice’s reasoning: policy clarity, good faith and evidentiary proof

A clear and consistently enforced workplace policy can support termination for just cause

Bison Transport argued that it had just cause to terminate Mr. McCarthy’s employment after he violated its Policy by failing a second drug test while employed in a safety sensitive position.

The Court agreed. In its decision, the Court reaffirmed that an employer relying on a breach of a corporate policy as grounds for termination must prove that the policy was well-known to the employee, that it was consistently enforced, and that it imposed consequences proportionate to the implications of the breach.

The evidence showed that the Policy had been clearly communicated to and understood by Mr. McCarthy and that it was consistently enforced by Bison Transport. The Court also noted that Mr. McCarthy had acknowledged, following his first failed drug test in 2014, that a second failed test could result in his immediate termination. Further, the Court found that the Policy itself was reasonable given the safety sensitive nature of Mr. McCarthy’s position.

Finally, the Court found no evidence that Mr. McCarthy had, or was perceived to have, a substance addiction or dependency issue that would have triggered Bison Transport’s duty to accommodate. The Court concluded that, given the “uncontradicted evidence” that Mr. McCarthy neither suffered from nor was perceived to suffer from a drug-related disability, Bison Transport had no obligation to accommodate him and was justified in terminating his employment for cause following his second failed drug test.

Honest and transparent termination processes can limit an employer’s damages exposure

Mr. McCarthy sought damages for breach of contract and breach of the Canadian Human Rights Act, as well as aggravated and punitive damages.

Having found that Mr. McCarthy was not wrongfully dismissed, the Court briefly considered the damages that would have been awarded had his claim succeeded. In doing so, it rejected his claim for damages under the Canadian Human Rights Act, emphasizing that there was no evidence that he suffered from a disability or was perceived to have one.

The Court also dismissed Mr. McCarthy’s claims for aggravated and punitive damages, finding no evidence to support the allegation that Bison Transport engaged in unfair, bad-faith or otherwise deliberate unlawful behaviour during his termination. In contrast, Bison Transport was found to have acted honestly and transparently throughout the process, motivated by legitimate public safety concerns. The Court concluded that, even if Mr. McCarthy had been wrongfully dismissed, Bison Transport's conduct during the termination process did not warrant an award of aggravated or punitive damages.

What McCarthy v. Bison Transport Inc. means for Ontario employers

Employers in safety sensitive industries may rely on workplace policies, including drug and alcohol policies, to justify termination for just cause. To do so, however, employers must ensure their policies are clear, well-communicated to employees, consistently enforced, and proportionate to the breach.
Employers should maintain complete and accurate records of policy documents, employee training, signed acknowledgements, warnings, testing results, and other documentation showing that employees understand applicable policies, procedures and consequences.
Random drug and alcohol testing may be permissible in safety sensitive workplace environments, particularly where the testing is connected to legitimate safety concerns and implemented through a reasonable workplace policy.
If human rights issues are engaged (for example, in the drug and alcohol context if the employee has or is perceived to have a drug or alcohol dependency), employers must remain mindful of the duty to accommodate to the point of undue hardship. On the other hand, recreational drug use alone, without a dependency, does not trigger an employer’s duty to accommodate.
Employers can reduce the risk of aggravated and punitive damages by handling disciplinary and termination decisions honestly, transparently and in good faith.

BLG’s Labour and Employment group can help

If you have questions about just cause dismissal or any other labour and employment matter, BLG's Labour & Employment Group provides strategic advice to employers across Canada. Reach out to the authors or key contacts for guidance tailored to your organization.

SCC confirms: You have a constitutional right to judicial review on all issues

Thu, 30 Jul 2026 00:00:00 Z

In Democracy Watch v. Canada (Attorney General), the Supreme Court of Canada confirmed that the Constitution guarantees the availability of a legality review for all aspects of an administrative decision. Privative clauses purporting to oust the courts from this supervisory role are unconstitutional.

The Supreme Court held that general political oversight of the Conflict of Interest and Ethics Commissioner (the Commissioner) by Parliament does not provide an adequate alternative remedy for judicial review of the Commissioner’s decisions. The Supreme Court declared a partial privative clause purporting to preclude judicial review of the Commissioner’s decisions on questions of fact and law to be unconstitutional.

Key takeaways

Judicial review is available for all aspects of an administrative decision: Legality review of both questions of fact and law is part of the superior courts’ core supervisory jurisdiction protected by sections 96 to 101 of the Constitution Act, 1867. The Court declined to endorse the view that reasonableness review under Vavilov is the constitutionally guaranteed minimum.
Partial privative clauses are unconstitutional: Legislatures cannot constitutionally oust the courts’ core supervisory jurisdiction through privative clauses, even partial ones. Privative clauses that cannot be read as constitutionally compliant should be struck down.
An adequate alternative remedy must provide for a legality review and a commensurate remedy: While a court has discretion to decline to consider the merits of a judicial review application based on an “adequate alternative remedy”, the alternative forum must provide for a legality review of the impugned decision and offer a remedy commensurate with that which would have been available on judicial review.
General political oversight is not an adequate alternative to judicial review: Though Parliament has a general oversight role over the Commissioner, this political oversight did not provide the remedy available on judicial review to Democracy Watch, namely, consideration of the legality of the Commissioner’s report.

Background

The Commissioner issued a report on May 14, 2021, finding that then-Prime Minister Justin Trudeau had not contravened the Conflict of Interest Act, S.C. 2006, c. 9 (the COIA), in relation to two WE Charity funding decisions. Democracy Watch applied to the Federal Court of Appeal for judicial review of the Commissioner’s report, alleging errors of fact and law. The Attorney General of Canada brought a motion to strike Democracy Watch’s application, in part on the basis that the privative clause in s. 66 of the COIA prohibits judicial review of the Commissioner’s decision on questions of fact and law, limiting review to questions of jurisdiction alone.

A full panel of the Federal Court of Appeal allowed the Attorney General’s motion on the basis that Democracy Watch had adequate alternative remedies available to it, namely, political oversight by the Standing Committee on Access to Information, Privacy and Ethics, which receives annual reports from the Commissioner on the administration of the COIA. Relying on Canada (Auditor General) v. Canada (Minister of Energy, Mines and Resources), in which the Supreme Court held that the Auditor General had an adequate remedy to address grievances with the Governor in Council’s decisions under the Auditor General Act through a Parliamentary reporting mechanism, the Federal Court of Appeal determined that Parliament’s political oversight of the Commissioner under the COIA provided an alternative remedy in this case. In a minority opinion, Chief Justice de Montigny also would have found that the privative clause in s. 66 barred judicial review, though the majority did not agree that the privative clause was enforceable.

Supreme Court of Canada decision

The Supreme Court allowed Democracy Watch’s appeal. In a unanimous decision written by Chief Justice Wagner, the Supreme Court held that there was no adequate alternative remedy available to Democracy Watch, and that the Constitution requires legality review of all aspects of administrative decisions, including on questions of fact and law. Section 66 of the COIA, which purported to oust review on certain issues, was therefore unconstitutional and declared to be of no force and effect to the extent it bars judicial review on questions of fact and law.

A political process to enforce the COIA is not an adequate alternative remedy

The Supreme Court held that the Federal Court of Appeal erred by treating political oversight by Parliament through the Commissioner’s annual reporting obligation as an adequate alternative remedy. While the courts have discretion to decline to hear the merits of an application for judicial review where there is an adequate alternative remedy, an alternative forum is only adequate if it provides for a legality review of the administrative decision, and if a commensurate remedy can be ordered.

The Supreme Court distinguished Auditor General, in which the Auditor General himself sought judicial review but had access to an alternative political remedy, from the situation of Democracy Watch, which brought an application for judicial review based on public interest standing and has no other recourse under the COIA. Parliament’s political oversight does not provide Democracy Watch with any right to a legality review of the Commissioner’s report. Additionally, s. 47 of the COIA provides that the Commissioner’s conclusions in the challenged report are final and may not be altered by anyone. As such, the Supreme Court of Canada observed it was “hard to see” what political remedy Parliament could offer Democracy Watch. The only way for Democracy Watch to obtain legality review of the Commissioner’s report was through the courts.

The Constitution guarantees legality review on questions of fact and law

The Supreme Court also affirmed that the Constitution guarantees legality review of all aspects of an administrative decision, including questions of fact and law. Pursuant to the judicature provisions in ss. 96–101 of the Constitution Act, 1867, the courts play a constitutional supervisory role over the administrative state, through judicial review of exercises of public power. This role is fundamental to the rule of law, which requires that all legal powers be exercised in accordance with their limits. The Supreme Court’s emphasis on the importance of judicial review to the rule of law follows its prior decisions which reiterated the constitutional nature of the right to seek judicial review, including Yatar v. TD Insurance Meloche Monnex.

Though in Crevier v. Attorney General of Quebec, the Supreme Court had observed that a privative clause cannot shield an administrative decision from judicial review on questions of jurisdiction, the Supreme Court found that this does not mean that judicial review on questions of fact and law can be so shielded. Rather, the Court concluded that Crevier must be understood in its proper historical context—including the courts’ evolving understanding of what constitutes a “jurisdictional question”, and the changes in the applicable standard of review. Crevier never intended to permit privative clauses to shield unreasonable findings of fact or law from judicial review.

However, the Court declined to endorse the view from certain parties and interveners that the reasonableness review as defined in Vavilov is the constitutionally guaranteed minimum seeing as the common law standards of review can be and have been modified over time, leaving that issue for another day.

Accordingly, legislation that purports to oust the courts’ supervisory role is unconstitutional. The Supreme Court held that s. 66 of the COIA, which purports to oust judicial review on questions of fact and law, could not be read in a constitutionally compliant manner, and therefore declared it to be of no force and effect.

The Court’s decision in Democracy Watch will be relevant in the upcoming appeal in Canadian National Railway Company v. Alberta Pacific Forest Industries Inc. (42092), set to be argued in November, addressing the constitutionality of s. 18.5 of the Federal Courts Act, which ousts the Federal Courts’ jurisdiction to hear a judicial review application where the matter may be appealed to the Governor in Council. BLG is counsel for CN in the appeal.

What CIRO is doing: Enforcement report for 2025-2026

Tue, 28 Jul 2026 00:00:00 Z

On July 22, 2026, the Canadian Investment Regulatory Organization (CIRO) released its enforcement report for the 2026 fiscal year, from April 1, 2025, to March 31, 2026 (the Report), which can be found here. The Report covers enforcement activities and priorities for both investment and mutual fund dealers over the past year and notes that most integration priorities have now been completed. CIRO “continues to modernize its regulatory approach by integrating systems, policies and processes to strengthen regulatory effectiveness.”

Key CIRO enforcement trends for investment and mutual fund dealers

We have excerpted some important findings from the Report and believe these trends will continue in the year ahead:

CIRO focuses on dealer supervision, gatekeeping and compliance systems:
1. CIRO continues to focus on cases involving system issues, dealer supervision and gatekeeping. While there are still individual misconduct cases, there is a noticeable shift toward scrutinizing firms’ compliance systems with a focus on preventing misconduct, not simply responding to it.
CIRO pursues fewer enforcement proceedings with higher fines:
1. Year over year, proceedings commenced and concluded have decreased, but sanctions and disgorgement have significantly increased. This means CIRO is prosecuting fewer cases but pursuing higher-value proceedings.
CIRO harmonizes MFDA and IIROC enforcement systems:
1. The Report emphasizes that the MFDA and IIROC systems have merged and are operating as one system.

CIRO enforcement activity in 2026 focuses on investor protection and market integrity

The Report highlights that in 2026, CIRO hearing panels imposed more than $15 million in sanctions. The Report also notes that suspensions and permanent bars were imposed, predominantly against individuals, and that CIRO continued to pursue disgorgement orders. The cases advanced focused on the effectiveness of supervision and internal controls, as well as the obligation of regulated entities and individuals to act as gatekeepers to the capital markets.

CIRO also continued to refer cases to the Canadian Securities Administrators (CSA). In the 2026 fiscal year, 86 market-related cases were referred, including 32 manipulation cases, nine insider trading cases and 45 other Securities Act violations.

This year, the Report focuses on cases involving the protection of investors from unfair, improper or fraudulent practices, improving industry standards and promoting market integrity:

Against firms, the Report noted several decisions related to breaches of supervisory obligations and a lack of due diligence in the opening and operation of accounts.
Against individual regulated persons, the Report drew attention to decisions relating to discretionary trading, misappropriation of client funds and unauthorized transfers.

CIRO enforcement statistics show higher sanctions and changing complaint trends

The Report includes a detailed summary of statistics on sanctions imposed in 2026, the fine collection rate and the number of complaints, investigations and enforcement proceedings.

In 2026, there were a total of nine decisions against firms, compared with seven decisions in 2025 and 10 decisions in 2024. The quantum of monetary sanctions against firms more than doubled in 2026, reversing the decline seen between 2024 and 2025. Dealers were collectively ordered to pay a total of $4,097,500 in fines in 2026, up from $2,400,000 in 2025. Dealers were also ordered to disgorge a total of $4,305,790, a nearly sevenfold increase from $623,925 in 2025.

As for individuals, total fines ordered increased from $4,992,523 in 2025, in connection with 50 decisions, to $6,266,999 in 2026, in connection with 39 decisions. The quantum of disgorgement decreased from $1,718,059 in 2025 to $958,684 in 2026, though this amount remains higher than the $427,997 in disgorgement in 2024. There was also a decrease in the number of suspensions, conditions and permanent bars compared with 2025.

The number of Complaints and Settlement Reporting System (ComSet) complaints increased substantially, from 3,833 in 2025 to 6,426 in 2026. However, CIRO attributed the increase to several large mutual fund dealer members filing service-related and other events in ComSet that were not previously reported in the Member Event Tracking System (METS) and noted that the additional events did not raise regulatory concerns or increase the number of enforcement cases opened.

Notably, 2026 saw a year-over-year decrease in enforcement proceedings, both commenced and concluded, continuing the trend from 2024 to 2025. The majority of concluded proceedings were settlement hearings, with the firms or registered individuals involved agreeing to the imposed sanctions.

Increased scrutiny for regulated firms

CIRO’s 2025-26 enforcement report signals a continued focus on stronger supervision, effective compliance systems and meaningful consequences for misconduct. Regulated firms should review their internal controls, supervision practices and gatekeeping obligations to ensure they are prepared for increased scrutiny in the year ahead.

The clean economy ITC labour requirements: How they work, new CRA guidance and some residual issues

Mon, 27 Jul 2026 00:00:00 Z

NOTE: For a print-friendly version of this document that includes visuals and tables, please download and print the .pdf file.

Canada’s clean economy investment tax credits (ITCs) constitute a major tax policy expenditure supporting Canada’s efforts to achieve a net-carbon-zero economy by 2050. These ITCs, which are explained and summarized here, are often a critical element in the financial viability of many carbon capture, energy generation, battery storage and other clean economy projects.

While the details of the different clean economy ITCs vary somewhat, they generally follow a more or less common format:

eligible taxpayers, generally taxable Canadian corporations, incur expenditures that qualify for a particular clean economy ITC (“qualifying expenditures”), generally being the cost of specific tangible property designated as ITC-eligible, such as a wind turbine;
qualifying expenditures generally include the full cost of acquiring and installing ITC-eligible property and putting it into active service, but generally exclude “preliminary work activity” such as front-end design or engineering work; and
for each taxation year, the eligible taxpayer claims an amount of the particular clean economy ITC equal to total qualifying expenditures for that year, reduced by any “government assistance” received or receivable by the taxpayer, multiplied by the ITC rate for that particular clean economy ITC. This is done by completing and filing the prescribed form applicable to that particular clean economy ITC by the deadline permitted for so doing. Prescribed forms and other information can be found on the Canada Revenue Agency’s clean economy ITC webpage. The amount of ITC the taxpayer is entitled to is credited to the taxpayer’s CRA account and either reduces its taxes owing or is paid to the taxpayer.

Taxpayer’s $ ITC entitlement = ITC rate × $ taxpayer’s qualifying expenditures

When it comes to the ITC rate, the taxpayer has a choice to make when claiming the ITC and completing the required prescribed form (except for the Clean Technology Manufacturing ITC, to which the labour requirements do not apply). If a taxpayer elects to meet the “labour requirements” set out in s. 127.46 ITA, it may claim the particular clean economy ITC at the “regular tax credit rate.” This means the full ITC rate specified in the legislation, such as 30 per cent for the Clean Technology ITC, 15 per cent for the Clean Electricity ITC and so on. Otherwise, the taxpayer may claim only the “reduced tax credit rate,” being 10 percentage points lower than the “regular tax credit rate,” viz., 20 per cent for the Clean Technology ITC, five per cent for the Clean Electricity ITC and so on. It is not uncommon on major clean economy projects for the difference between the regular and reduced ITC rate to amount to tens of millions of dollars, or more on the largest projects.

If a taxpayer elects to meet the labour requirements (which consist of a “prevailing wage requirement” and an “apprenticeship requirement”) but does not in fact meet them, there are two possible outcomes as regards the ITC rate:

if the CRA determines that the taxpayer failed to meet those requirements “knowingly or in circumstances amounting to gross negligence” (the K/GN Standard), the taxpayer effectively suffers a 15 per cent ITC rate reduction, i.e., what would normally be a 30 per cent rate for the Clean Technology ITC essentially becomes 15 per cent instead, a catastrophic result for many clean economy projects; or
otherwise, the taxpayer gets the regular tax credit rate but must pay a per diem tax in ss. 127.46(6) or (7) to the CRA and top-up payments to any underpaid employees.

Hence, the K/GN Standard constitutes a fork in the road for establishing the consequences of labour requirements non-compliance.

The discussion that follows describes some of the interpretive and practical issues associated with the labour requirements, and reviews the conclusions reached by the CRA’s Income Tax Rulings Directorate (Rulings) in CRA document 2025-1081341E5, dated April 28, 2026 (the New CRA Guidance). In the New CRA Guidance, Rulings answers questions about a situation where the taxpayer has engaged a contractor whose employees (1) are not covered by an eligible collective agreement and (2) are paid less than what the labour requirements prescribe to be the compensation necessary to comply with the “prevailing wage” element of the labour requirements.

The New CRA Guidance makes the following interpretive determinations:

in a situation where no eligible collective agreement applies to covered workers who have been paid less than the prevailing wage, the taxpayer can correct this deficiency, i.e., pay these workers the shortfall to bring them up to the prevailing wage, any time before the taxpayer prepares and files their ITC claim for the relevant taxation year and be in full compliance with this element of the prevailing wage requirement. As a result of being in compliance, the per diem tax in s. 127.46(6) will not be applicable, and the late payment of these workers will not prevent the taxpayer from attesting to having met the labour requirements or risk transgressing the K/GN Standard if the taxpayer elects to meet the labour requirements and claim the regular tax credit rate;
in cases where the per diem tax in s. 127.46(6) does apply, it is computed with reference to the number of days of work for which the relevant worker was not paid the prevailing wage, viz., “each day” means “each day of work for which the worker was short-paid,” not “each day such shortfall remains unpaid” or any other interpretation;
a taxpayer who has actual knowledge of a prevailing wage requirement deficiency cannot remedy it so as to come into compliance by paying the top-up penalty described in s. 127.46(13) to the CRA;
a taxpayer who has actual knowledge of a prevailing wage requirement deficiency for a particular taxation year, elects to meet the labour requirements and claims the regular tax credit rate for that year risks transgressing the K/GN Standard and the very adverse consequences that entails, and should instead claim only the reduced tax credit rate for that year;
a taxpayer may claim the reduced tax credit rate in one taxation year without thereby disentitling itself from claiming the regular tax credit rate in other years, viz., the reference to “each installation taxation year” in s. 127.46(2) should not be interpreted as requiring a taxpayer to elect to meet the labour requirements for every installation taxation year in respect of any particular clean economy ITC; and
where a taxpayer does transgress the K/GN Standard in respect of a particular taxation year, the adverse implications of that are limited to that particular taxation year, viz., the reference in s. 127.46(9)(a) to being “not entitled to the regular tax credit rate” is limited to that taxation year (referred to in s. 127.46(9) as the “claim year”).

This article goes on to address an apparent legislative gap in the rules relating to the K/GN Standard that is problematic where an ITC claimant knows, or strongly suspects, some element of the prevailing wage requirement has not been met for one or more covered workers, and is practically unable to remedy the situation in a way that meets the definition of “compliance” within the meaning of the statute. For example, where a covered worker is an employee of a contractor or subcontractor retained by the taxpayer to work on the project, i.e., the taxpayer has no direct relationship with the relevant employee, the taxpayer may have no practical ability to ensure that any shortfall is paid to the employee if the contractor becomes unco-operative, goes out of business or loses contact with the employee.

Read literally, the rules as drafted would appear to prevent such a taxpayer from claiming the regular tax credit rate for fear of being found to have “knowingly or in circumstances amounting to gross negligence failed to meet those requirements” if they claim the regular tax credit rate. Such a taxpayer would thus be forced into claiming only the reduced tax credit rate because the compliance deficiency, no matter how small, they are aware of is one they do not have the ability to fix. The imposition of a 10 per cent ITC rate reduction for the entire amount of the taxpayer’s clean economy ITC claim for the year seems profoundly disproportionate and unfair in such circumstances.

Fundamentally, some mechanism is needed for allowing a taxpayer who is aware of a compliance deficiency and is willing to address it to do so in a way that is considered to constitute “compliance” with the labour requirements, allowing the taxpayer to claim the regular tax credit rate without fear of transgressing the K/GN Standard. For example, deeming self-reported compliance deficiencies not to meet the K/GN Standard would encourage taxpayers trying to meet the policy objectives of the labour requirements to do so rather than opt out of them and claim the reduced tax credit rate, a lose-lose outcome.

I. The labour requirements: Overview

The labour requirements are intended to “incentivize companies to create good jobs”. They are modelled on similar requirements that exist under comparable U.S. tax credit legislation, although they are used in the U.S. for other purposes and American taxpayers have decades of experience in dealing with them. The labour requirements have two distinct elements:

the “prevailing wage requirements”, which require “covered workers” to be adequately compensated for the “preparation or installation” of ITC-eligible property at the taxpayer’s work site (herein, P&I Work); and
the “apprenticeship requirements”, which require the taxpayer to make reasonable efforts to ensure that apprentices registered in Red Seal trades (or equivalent provincially registered trade) work at least 10 per cent of the hours worked during the year by “covered workers” who are Red Seal workers performing P&I Work at the taxpayer’s project site. For this purpose, a safe harbour rule deems the taxpayer to have met this requirement where it takes the prescribed actions.

“Covered workers”

A key concept of both labour requirements is “covered workers”, defined as an individual:

who is an employee (whether of the taxpayer or someone else, such as a contractor retained by the taxpayer or sub-contractor of such contractor) engaged in P&I Work;
whose duties at the taxpayer’s work site are primarily manual or physical; and
who is neither an administrative, clerical or executive employee nor a “business visitor to Canada” as described in section 187 of the Immigration and Refugee Protection Regulations.

The “covered worker” definition raises various interpretive questions. For example, the scope of what constitutes P&I Work is a matter of some judgment. As a general rule, it seems logical to presume that the scope of P&I Work would not include activities that are excluded from ITC eligibility. For example, one would think that activities excluded from eligibility for the CCUS ITC as “preliminary CCUS work activity” generally should not be considered to be “preparation or installation” of CCUS ITC-eligible property, by virtue of being “preliminary to the acquisition, construction, fabrication or installation of” such property.

To some degree, this is supported by a careful reading of the ITC legislation and, in particular, the “covered worker” definition, which refers to the preparation or installation “of” ITC-eligible property. Some looser connection between the preparation/installation work and the ITC-eligible property could have been used, such as preparation or installation activities “relating to” or “in respect of” ITC-eligible property. The choice was made to limit activities that are in-scope of the labour requirements as P&I Work to those with a closer, more direct link between ITC-eligible property and the in-scope activities created by the use of the preposition “of.”

In this regard, CRA document 2025-1081921E5, dated February 25, 2026, is interesting. It considered the case of a very large property described in Class 57(a) to be used in a carbon capture project. This property required a large hole to be excavated, and pilings installed in the hole in order to create a concrete foundation to permanently support the ITC-eligible property. The foundation constituted a Class 57(f) property¹ so as to be itself be ITC-eligible, leading Rulings to conclude as follows:

As a result, Canco would be subject to the labour requirements for the preparation or installation of the Foundation (a specified property), provided that Canco elects to meet the labour requirements under subsection 127.46(2). In our view, this would include the excavation of the hole into which the Foundation will be placed, the installation of the pilings and the pouring of the concrete to construct the Foundation. All of these activities are part of the installation of the Foundation and therefore would constitute the “preparation or installation of specified property” for purposes of the labour requirements in section 127.46.

Similarly, it will not always be clear whether a particular worker’s P&I Work duties are “primarily manual or physical in nature.” For example, a foreman directly supervising the activities of those who are engaged in manual P&I Work may not meet this test in many cases, depending on their actual duties, while a lead hand who is herself operating machinery while advising less-experienced workers often will. Presumably, the key distinction is how frequently a worker’s duties involve hands-on activity versus supervising those engaged in such work. This would be consistent with CRA document 2025-1070641E5, dated Oct. 2, 2025, where Rulings states: “It is our view that the phrase ‘manual or physical in nature’ as it appears in the definition of ‘covered worker’ within the Labour Requirements refers to those duties that involve physical exertion (including using tools or machines to perform the physical labour) as opposed to mental exertion.”

There is also CRA guidance as to what constitutes the taxpayer’s work site, being the geographic location where activities are potentially in-scope of the labour requirements. In CRA document 2025-1070641E5, Rulings stated as follows:

In our view, a work site will only be a designated work site of an incentive claimant if the work site is at the disposal of the incentive claimant, based on a textual, contextual and purposive analysis of section 127.46. This could include a work site that the incentive claimant owns, rents or to which the incentive claimant otherwise has legal access, provided that it has control over the work site and can access it at its own discretion.

sandbox="allow-scripts allow-same-origin allow-popups allow-popups-to-escape-sandbox"

The prevailing wage requirements

The prevailing wage requirements consist of three distinct components: a compensation element (s. 127.46(3)(b)(i)), an attestation element (s. 127.46(3)(b)(ii)) and a notice element (s. 127.46(3)(b)(iii)). First, the compensation element mandates that all covered workers be compensated for their P&I Work either (1) in accordance with any eligible collective agreement applicable to that worker or (2) if no such eligible collective agreement applies, in an amount no less than the non-overtime wages and benefits specified in the eligible collective agreement that most closely aligns with the covered worker’s experience level, tasks and location. It is unclear whether the text is to be read literally as creating a substantively broader requirement when an eligible collective agreement applies, i.e., the taxpayer becomes non-compliant if any term of that eligible collective agreement isn’t fully met. To date, the CRA has not provided any guidance on this point, although from a tax policy perspective it seems counterintuitive to hold employers governed by an eligible collective agreement to a more stringent standard for ITC purposes than other employers.

sandbox="allow-scripts allow-same-origin allow-popups allow-popups-to-escape-sandbox"

In addition, the notice element requires the taxpayer to meet a job site notice requirement, while the attestation element requires the taxpayer to attest that it has (1) in fact met the compensation element of the prevailing wage requirement for its own employees and (2) taken reasonable steps to ensure the employers of any other covered workers, i.e., contractors, subcontractors and others, have done likewise. The CRA has provided guidance online as to what “reasonable steps” means. The New CRA Guidance includes further commentary on how a taxpayer can demonstrate that “reasonable steps” have been taken.

The attestation element is not an attestation to having actually met the prevailing wage requirements. Instead, it requires the taxpayer to attest to having in fact met the prevailing wage requirements as regards its own employees, but only to having “taken reasonable steps to ensure that any covered workers employed by any other person” have been compensated in accordance with the required standard.

It is also important to understand that while the apprenticeship requirements can be definitively met by making “reasonable efforts” to achieve a specified result,² the same is not true of the prevailing wage requirements. To comply with the prevailing wage requirements, one must in fact achieve the prescribed results: reasonable efforts do not suffice.

There is thus a gap between what a taxpayer must attest to as part of meeting the prevailing wage requirements and what the taxpayer must actually achieve in order to meet them and thereby comply with the prevailing wage requirements. Specifically, while meeting the attestation element of the prevailing wage requirements requires only “reasonable steps” of the taxpayer as regards the employees of contractors and subcontractors, meeting the compensation element demands that all covered workers have in fact been compensated as required. In many cases, this is not always entirely within the taxpayer’s control.

There are two principal implications from the fact that making “reasonable efforts” to comply with the compensation element of the prevailing wage requirements is insufficient to have complied with the prevailing wage requirements:

if the “normal” compliance deficiency rules apply (i.e., the taxpayer’s actions do not meet the K/GN Standard), the applicable penalty/remediation provisions effectively hold the taxpayer strictly liable for any deficiency in paying the prevailing wage to all covered workers, not just the taxpayer’s own employees. Simply making “reasonable efforts” towards complying with the prevailing wage requirements is not enough to avoid the consequences of failing to actually meet them; and
a taxpayer who has taken reasonable steps to prevent a compliance deficiency as to the compensation element of a contractor’s covered employees but who is aware a deficiency exists (1) can truthfully make the necessary attestation, but (2) risks the consequences of s. 127.46(9) if it claims at the regular tax credit rate while having knowledge of the contractor’s compliance deficiency. Put another way, making reasonable efforts to ensure that contractors meet the compensation element of the prevailing wage requirements may not be good enough to claim the regular tax credit rate without transgressing the K/GN Standard if the taxpayer knows of, or perhaps strongly suspects, that a compliance deficiency exists.

II. Labour requirements compliance

As noted, taxpayers claiming clean economy ITCs have a choice. A taxpayer can choose not to elect to meet the labour requirements and simply claim the relevant ITC at the reduced tax credit rate. Alternatively, if a taxpayer elects to meet the labour requirements and is determined not to have fully complied with them, the consequences depend on whether the taxpayer’s actions are considered to have met the K/GN Standard or not.

sandbox="allow-scripts allow-same-origin allow-popups allow-popups-to-escape-sandbox"

Non-compliance: Normal circumstances

In “normal” circumstances where the K/GN Standard is not met, the consequences of non-compliance are much less severe. The taxpayer’s entitlement to the regular tax credit rate remains undisturbed. However, a taxpayer who has not complied with the apprenticeship requirements is liable to pay, as additional Part I tax, an additional $50³ for each hour of work that was required to be performed by apprentices registered in Red Seal trades on P&I Work for the year in order to meet the statutory target but was not, under s. 127.46(7). A taxpayer that has not complied with the prevailing wage requirements faces two sanctions:

s. 127.46(6), which obligates the taxpayer to pay, as additional Part I tax, “an amount equal to $20⁴ for each day in the installation taxation year on which the covered worker was not paid the prevailing wage” (the s. 127.46(6) per diem tax); and
ss. 127.46(11)-(14), which applies where the CRA has notified the taxpayer of a compliance deficiency and which obligates the taxpayer to either make up any deficiency in the compensation element of the prevailing wage requirements (plus interest) to the short-paid employee (a top-up amount) or pay 120 per cent of that amount to the CRA as a penalty.

Amounts paid as additional tax or penalty are non-deductible, while penalties are potentially eligible for CRA relief under s. 220(3.1) in appropriate circumstances. Top-up amounts are treated as salary and wages and so are deductible to the payer when paid, but are excluded from being eligible for the relevant clean economy ITC under s. 127.46(14).

The wording of the per diem tax in s. 127.46(6) reads as follows:

(6) Unless subsection (9) applies, if an incentive claimant claims a specified tax credit at a regular tax credit rate in a taxation year but does not meet the prevailing wage requirements in respect of a covered worker for one or more days in an installation taxation year in respect of that specified tax credit, there shall be added to the tax payable under this Part for the installation taxation year by the incentive claimant an amount equal to $20 for each day in the installation taxation year on which the covered worker was not paid the prevailing wage.

There is some degree of interpretive uncertainty as to the scope of “each day in the installation taxation year on which the covered worker was not paid the prevailing wage.” Specifically, this phrase could be read as describing each day of work for which a particular worker received less than the prevailing wage, or potentially as each day during the year where the shortfall for any such underpaid work date remained outstanding and unpaid. The New CRA Guidance resolves this question, indicating that the former is the correct interpretation in the answer to Question 2.

sandbox="allow-scripts allow-same-origin allow-popups allow-popups-to-escape-sandbox"

Non-compliance: Knowingly or in circumstances amounting to gross negligence

Alternatively, if the taxpayer is determined to have failed to comply knowingly or in circumstances amounting to gross negligence, ostensibly on any element of the labour requirements and in any amount, it effectively suffers a 15 per cent ITC rate reduction, i.e., what would normally be 30 per cent for the Clean Technology ITC effectively becomes 15 per cent. The maximum ITC claim allowed is the reduced tax credit rate, and a penalty amount equal to another five per cent ITC rate reduction applies, thus making the consequences of claiming the full rate where the K/GN Standard has been met much worse than simply claiming the reduced tax credit rate.

The framing of one-third of the adverse consequence as a penalty rather than a further reduction in the applicable tax credit rate in theory allows the CRA to waive it under s. 220(3.1), although presumably the scope for such relief will be limited given the “knowingly or grossly negligent” threshold for when this penalty applies. Logical cases for penalty relief would include ones where the amount of K/GN non-compliance was fairly minimal, or where the taxpayer self-reports after having made good-faith remediation efforts. The CRA’s policies on discretionary penalty relief are set out in IC07-1R1.

The phrase “knowingly or in circumstances amounting to gross negligence” as used in s. 127.46(9) is almost identical to the standard prescribed in s. 163(2) for penalties for false statements or omissions. As such, prima facie, one would expect the jurisprudence developed under that latter provision to be equally applicable to interpreting the K/GN Standard established in s. 127.46(9).

In Canada v. Paletta Estate (2022 FCA 86),⁵ the Federal Court of Appeal had occasion to review what the K/GN Standard entails and what differentiates it from “normal” negligence:

[65] Neglect under subparagraph 152(4)(a)(i) refers to a lack of reasonable care. The duty of reasonable care is met if the taxpayer has “thoughtfully, deliberately and carefully assesse[d] the situation and file[d] on what he believe[d] bona fide to be the proper method”; in other words, “in a manner that the taxpayer truly believe[d] to be correct” (Regina Shoppers Mall Ltd. v. Canada, [1990] 2 C.T.C. 183, 90 D.T.C. 6427 (F.C.T.D.), aff’d (1991), 126 N.R. 141, 91 D.T.C. 5101 (F.C.A.); see also Canada v. Johnson, 2012 FCA 253, 435 N.R. 361, [2013] 1 F.C.R. D-2). This test is not disputed by the parties. The Court may also draw inferences of negligence from an omission to verify the validity of a taxpayer’s belief (Robertson v. Canada, 2016 FCA 303, 2016 D.T.C. 5131, at paragraphs 5 and 6).

[66] In contrast, subsection 163(2) requires that the false statement be made knowingly or in circumstances amounting to gross negligence. This burden can be met either directly or constructively, through a demonstration of wilful blindness (Wynter v. Canada, 2017 FCA 195, 2017 D.T.C. 5114 (Wynter), at paragraph 16):

In sum, the law will impute knowledge to a taxpayer who, in circumstances that suggest inquiry should be made, chooses not to do so. The knowledge requirement is satisfied through the choice of the taxpayer not to inquire, not through a positive finding of an intention to cheat.

[67] Wynter teaches that although wilful blindness and gross negligence often converge, they are conceptually different. Rennie J.A., writing for this Court, explains this difference as follows (Wynter, at paragraphs 18 and 19):

Gross negligence is distinct from wilful blindness. It arises where the taxpayer’s conduct is found to fall markedly below what would be expected of a reasonable taxpayer. Simply put, if the wilfully blind taxpayer knew better, the grossly negligent taxpayer ought to have known better.

Gross negligence requires a higher degree of neglect than a mere failure to take reasonable care. It is a marked or significant departure from what would be expected. It is more than carelessness or misstatements. The point is captured in the decision of this Court in Zsoldos v. Canada (Attorney General), 2004 FCA 338 at para. 21, 2004 D.T.C. 6672:

In assessing the penalties for gross negligence, the Minister must prove a high degree of negligence, one that is tantamount to intentional acting or an indifference as to whether the law is complied with or not. (See Venne v. R. (1984), 84 D.T.C. 6247 (Fed. T.D.), at 6256.)

[68] It can be seen from this that subsection 163(2) imposes a higher threshold with the result that conduct warranting the reopening of statute-barred years pursuant to subparagraph 152(4)(a)(i) will not necessarily justify the imposition of a penalty under the former (see for example Van der Steen v. The Queen (1984), 2019 TCC 23, 2019 D.T.C. 1024; see also Venne v. The Queen, 84 D.T.C. 6247, [1984] C.T.C. 223 (F.C.T.D.)). The opposite is however true; conduct that justifies the imposition of a penalty under subsection 163(2) will necessarily meet the threshold contemplated by subparagraph 152(4)(a)(i).

The CRA’s interpretation of these concepts can be found in the relevant portion of the CRA’s Income Tax Audit Manual (Chapter 28), which discusses the terms “knowingly” and “gross negligence”:

28.4.2 Knowingly or under circumstances amounting to gross negligence

It is vital to understand the meaning of the term “knowingly or under circumstances amounting to gross negligence” to apply a gross negligence penalty.

Knowingly, as used in subsection 163(2) of the ITA, implies that a taxpayer knew or ought to have known that the amount of tax paid was less than should otherwise have been paid for the purposes of the ITA or that the amount of refund or rebate claimed was greater than the amount that the person was eligible to receive for the purposes of the ITA. Knew implies that a taxpayer deliberately or intentionally acted in such a manner, while ought to have known does not mean actual knowledge, but means that the taxpayer had in effect the means of knowledge.

Gross negligence, as used in subsection 163(2), covers a set of facts which clearly indicates either that the taxpayer knew or ought to have known that an offence was committed under this subsection or that the taxpayer acted so carelessly or so negligently that the way in which the taxpayer handled their affairs amounted to gross negligence (that is, negligence of conspicuous magnitude). The set of facts typically fall in the categories of “(a) the magnitude of the omission in relation to the income declared, (b) the opportunity the taxpayer had to detect the error, (c) the taxpayer's education and apparent intelligence, (d) genuine effort to comply.” [Lauzon v The Queen, 2016 TCC 71, para 29, and 2016 FCA 298] “Gross negligence may be established where a taxpayer is wilfully blind to the relevant facts in circumstances where the taxpayer becomes aware of the need for some inquiry but declines to make the inquiry because the taxpayer does not want to know the truth” [Strachan v The Queen, 2015 FCA 60, para 4] and “consequently, the law will impute knowledge to a taxpayer who, in circumstances that dictate or strongly suggest that an inquiry should be made with respect to his or her tax situation, refuses or fails to commence such an inquiry without proper justification.” [Panini et al v The Queen, 2006 FCA 224, paragraph 43].

Go to 28.4.18, Other gross negligence penalties, for a list of court cases that discuss “knowingly” and “gross negligence.”

The factors cited by the CRA as relevant to determining whether the K/GN Standard has been met include the following:

28.4.4 Specific factors to consider when imposing gross negligence penalties

To determine if gross negligence penalties should be applied, consider (not an exhaustive list):

materiality of the false statement or omission
taxpayer’s history of contact with the CRA
taxpayer’s knowledge of tax matters
nature of the false statement or omission
taxpayer’s involvement in preparing the return
misinterpretation of the legislation
books and records
number of sources of taxable income
disclosure of other sources of taxable income
taxpayer’s history of compliance
signature on the return

The burden the CRA must discharge in order to support a K/GN finding has been described by the courts as a “heavy”⁶ one, and “the imposition of gross negligence penalties is to be applied in the clearest cases with the [CRA] being required to prove intent or reckless misconduct, otherwise taxpayers should be given the benefit of the doubt.”⁷ However, because the sanctions contained in s. 127.46(9) for being found to have breached the K/GN Standard are so severe, and will likely also create serious adverse non-tax implications, e.g., under relevant financing agreements, taxpayers can be forgiven for having a very low willingness to risk the CRA applying s. 127.46(9).

One of the questions posed in the New CRA Guidance was whether a taxpayer who was aware of a compliance deficiency beyond its ability to remedy at the time its ITC claim was filed could claim the regular tax credit rate, on the basis that it was ready and willing to correct the deficiency but simply could not do so. Not surprisingly, Rulings’ response (in the answer to Questions 1 and 2) was that the taxpayer could not claim the regular tax credit rate without risking the application of the K/GN consequences of s. 127.46(9):

If Canco knows that it did not meet one or more of the Labour Requirements at the time that it claims its CCUS tax credit for its 2025 taxation year, then it should not elect under subsection 127.46(2) in respect of that claim. If it does, Canco could be subject to the gross negligence penalty in subsection 127.46(9), if the Minister determines that it elected to meet the Labour Requirements and knowingly failed to meet those Labour Requirements.

This conclusion was further reiterated in the answer to Question 3:

The hypothetical facts state that, at the time of making its CCUS tax credit claim for Canco's 2025 taxation year, the three covered workers were not compensated in accordance with subparagraph 127.46(3)(b)(i). Therefore, at that time, Canco is aware that it has not complied with all of the Labour Requirements and should not elect under subsection 127.46(2) in respect of that specified tax credit or it could be subject to the gross negligence penalty in subsection 127.46(9).

Canco may decide to wait to make its claim for the CCUS tax credit for the 2025 taxation year until the prevailing wage requirements are met.

In fairness, there is not really much other answer Rulings could have provided, given the text of the statute and the K/GN jurisprudence. The response referenced the CRA’s further comments on s. 127.46(9) made at the 2025 Canadian Tax Foundation Round Table, memorialized as CRA document 2025-108081, which described a K/GN determination as “a question of fact that can only be determined after an examination of all the relevant facts and circumstances.” In this previous statement, the CRA indicated that while an “inability to substantiate that covered workers employed by others were compensated in accordance with subparagraph 127.46(3)(b)(i) should not, in and of itself” support a finding that the K/GN Standard had been met, the failure to take reasonable steps to ensure such compliance could support such a finding, and that in such circumstances “the gross negligence penalty under subsection 127.46(9) should generally apply.”

The further question was asked whether such a taxpayer could pre-emptively pay the CRA the shortfall penalty described in s. 127.46(13) in order to come into compliance and legitimately claim the regular tax credit rate. The answer to this suggestion was also “No”:

The “top-up penalty” in subsection 127.46(13) that you referred to in your question is only applicable if Canco receives a notification from the Minister specifying that it did not meet the prevailing wage requirements for a designated work site for a taxation year, pursuant to subsection 127.46(11). This is referred to as a Corrective Measure, and it is initiated by the CRA. There is no mechanism available to Canco to voluntarily pay the top-up penalty without having received this notification from the Minister.

This would also seem to be an accurate interpretation of the statute, as strictly speaking the procedure described in s. 127.46(13) is a sanction for non-compliance, and its text does not characterize payment as constituting compliance with the labour requirements. This then leaves a taxpayer with knowledge of a compliance deficiency that it cannot remedy in the unsatisfactory position of either claiming the reduced tax credit rate, which is bad, or claiming the regular tax credit rate and risking the consequences of s. 127.46(9), which is worse.

Non-compliance: Common problems

In practice most issues associated with labour requirements compliance arise from the compensation element of the prevailing wage requirement. Common problem areas include the following:

failing to correctly determine that a worker’s duties are primarily manual or physical, such that someone who was thought not to be a “covered worker” in fact is;
determining the scope of P&I Work too narrowly for one or more workers, such that more work and/or workers are in-scope of the labour requirements than originally thought; and
for a covered worker to whom no eligible collective agreement applies, incorrectly determining the regular wages and benefits applicable under the closest comparable eligible collective agreement.

This could occur for either the taxpayer’s own employees or, more typically, employees of a contractor or subcontractor, in respect of whom the taxpayer has less information and control and where the employer, i.e., not the taxpayer, generally has less incentive to achieve labour requirements compliance since it does not bear the cost of failure, subject to contractual allocation of consequences. For example, where a covered worker is an employee of a contractor or subcontractor retained by the taxpayer to work on the project, i.e., the taxpayer has no direct relationship with or information about the relevant employee, the taxpayer may have no practical ability to ensure that any shortfall is paid to the employee.

sandbox="allow-scripts allow-same-origin allow-popups allow-popups-to-escape-sandbox"

On large ITC-eligible projects with hundreds or thousands of covered workers and dozens of contractors, subcontractors and sub-subcontractors, the reality is that there will very often be situations where the taxpayer knows or has very good reason to think someone has been paid less than the prevailing wage. Taxpayers can try to remedy this, but there will not always be a solution offering reasonable certainty that compliance can be achieved. For example, contractors or subcontractors go out of business or become non-co-operative over contractual disputes, or their covered workers move away, sometimes without leaving contact information. This is often simply the on-the-ground reality. In such circumstances, the taxpayer’s ability to claim the regular ITC rate by electing into the labour requirements and in fact meeting the prevailing wage requirement is effectively frustrated by the inability to actually meet that requirement for literally each and every in-scope worker the taxpayer knows has, or believes may have, been underpaid.

One such potential compliance concern relates to when covered workers are paid the prevailing wage. Particularly on larger projects with numerous contractors and subcontractors, prevailing wage shortfalls arising from any of the foregoing reasons (or others) are virtually inevitable. If a taxpayer discovers a particular covered worker has been paid less than she should have been, can this be corrected in such a manner as to be considered compliant with the compensation element of the prevailing wage requirements?

There is no time specified in s. 127.46 by which the required compensation must be paid to the covered worker. Hence, at least in cases where no eligible collective agreement applies to the covered worker, so long as the required amount of compensation has been paid to the covered worker by the time the taxpayer files its ITC claim, it can truthfully attest to having met (past tense) the compensation element of the prevailing wage requirement. This was confirmed in the New CRA Guidance, where Rulings states in its Response to Questions 1 and 2:

Canco can elect to meet and attest that it met the Labour Requirements at the time that it makes its claim for the CCUS tax credit for its 2025 taxation year, provided that, at the time of making the claim, the three short-paid covered workers were compensated in accordance with the applicable Compensation Requirement above, based on the hypothetical facts.

This determination is both consistent with the text of the statute and the tax policy underlying the labour requirements: incentivizing employers to create good jobs that pay the prescribed level of wages. Given the severe potential consequences for non-compliance with the labour requirements, there is no apparent policy reason to find employers non-compliant if they pay the required wages but do so past an arbitrary deadline. The same tax policy would seem to be applicable in cases where an eligible collective agreement does apply, although the CRA has not expressed a view on this.

Non-compliance: Electing the reduced rate vs. s. 127.46(9) consequences

A taxpayer with actual knowledge or strong suspicion of a labour requirements deficiency has the unenviable choice of either claiming the reduced tax credit rate or claiming the regular tax credit rate and taking their chances that the CRA considers their circumstances to have met the K/GN Standard such that the punitive consequences of s. 127.46(9) apply. Both alternatives raise interpretive questions which the New CRA Guidance addresses.

Can one elect the reduced tax credit rate in one year and the regular rate in another?

A taxpayer considering whether to choose not to meet the labour requirements in a particular year and simply claim the reduced tax credit rate will want to understand the consequences of doing so. Specifically, if the choice to opt out of labour requirements compliance for one year has consequences in other years, this would greatly diminish the viability of doing so.

The operative labour requirements rule in s. 127.46(2) reads as follows:

(2) Despite sections 127.44, 127.45, 127.48 and 127.491, the applicable rate for each specified tax credit of an incentive claimant is the reduced tax credit rate unless the incentive claimant elects in prescribed form and manner to meet the prevailing wage requirements under subsection (3) and the apprenticeship requirements under subsection (5) for each installation taxation year in respect of the specified tax credit.

Paraphrasing, this provision establishes the reduced tax credit rate as the taxpayer’s applicable ITC rate unless the taxpayer elects to meet the labour requirements “for each installation taxation year”. A literal reading of this provision raises some concern that unless a taxpayer elects to meet the labour requirements for every installation taxation year in respect of any particular clean economy ITC, the applicable ITC rate for that particular ITC will be the reduced tax credit rate for every such year. Put another way, the legislative text does not make explicit that electing into the labour requirements in respect of a particular year only impacts that year, and that not electing for one year does not affect other years.

Fortunately, the New CRA Guidance provides a definitive interpretation that this is indeed the case, a common-sense result that is very helpful to have clarified. This is provided in the last sentence of the response to Question 4:

Response to Question 4

Since the subsection 127.46(2) election is made with a claim for a specified tax credit, and the hypothetical facts strongly suggest that Canco will not meet the Labour Requirements in 2025 (specifically the Compensation Requirement), Canco should not elect, and should claim the CCUS tax credit for the 2025 taxation year at the reduced tax credit rate. However, the hypothetical facts state that Canco will meet the Labour Requirements in 2026 and in 2027, therefore Canco can elect under 127.46(2) when it makes its claims for the CCUS tax credits for its 2026 and 2027 taxation years.

This response effectively reads the legislation as inferring the words “for any particular installation taxation year” after the words “the applicable rate”, and the reference to “each” installation taxation year as “that” installation taxation year. Interpreting the provision in a textual, contextual and purposive manner, it is eminently logical to conclude that electing to meet the labour requirements (or not) and claim the regular (or reduced) tax credit rate is a year-by-year exercise. In this manner, a taxpayer who cannot (or chooses not to) meet the labour requirements in one year is not disincentivized from trying to meet them (and thereby claim the regular tax credit rate) in other years.

Does a “knowingly/gross negligence” finding in one year affect other years?

As noted, the consequences of being found to have been non-compliant in a manner that reaches the K/GN Standard are severe. The text of s. 127.46(9) reads as follows:

(9) If an incentive claimant has claimed a specified tax credit at the regular tax credit rate in a taxation year (referred to in this subsection as the “claim year”) but has failed to meet the prevailing wage requirements or the apprenticeship requirements for an installation taxation year in respect of that specified tax credit and the Minister determines that the incentive claimant knowingly or in circumstances amounting to gross negligence failed to meet those requirements, then

(a) the incentive claimant is not entitled to the regular tax credit rate, and is entitled to not more than the reduced tax credit rate, for the specified tax credit; and

(b) the incentive claimant is liable to a penalty for the claim year equal to the amount determined by the formula

50 per cent × (A − B)

where

A is the amount of the specified tax credit claimed by the incentive claimant at the regular tax credit rate for the claim year, and
B is the amount that the incentive claimant would have been entitled to claim as a specified tax credit at the reduced tax credit rate for the claim year.

Unlike in paragraph (b) where the penalty is explicitly stated to be “for the claim year”, the disentitlement to the regular tax credit rate in paragraph (a) makes no reference to any particular year. This raises the question of whether denial of the regular tax credit rate applies to more than the particular year in which the K/GN Standard was found to have been met.

Once again, the New CRA Guidance interprets the legislation in a textual, contextual and purposive manner to clarify that the disentitlement to the regular tax credit rate should be read as referring only to “the claim year.” This is contained in the response to Question 5:

Response to Question 5

Assuming that the conditions of subsection 127.46(9) only apply to Canco for its claim for the CCUS tax credit for its 2025 taxation year (not the other claim years), the implications imposed under subsection 127.46(9) will only apply to its 2025 claim year (not the other claim years).

This is demonstrably the right answer, and the certainty it provides is helpful.

III. The labour requirements: Problems and suggestions

A taxpayer claiming clean economy ITCs to which the labour requirements apply has basically two choices:

forego meeting the labour requirements, and claim at the reduced tax credit rate (i.e., for the Clean Technology ITC, at the 20 per cent rate instead of the regular 30 per cent rate); or
decide to meet the labour requirements, invest the time and effort required to pursue compliance with them, and then formally elect to meet them for the year and claim the regular tax credit rate, on the basis that while compliance may not be perfect there are no compliance deficiencies that meet the K/GN Standard, so that the worst-case scenario is entitlement to the regular tax credit rate but possible per diem taxes and/or top-up payments.

As the law presently stands, a taxpayer who knows or has good reason to believe non-compliance exists with some element of the labour requirements and who nonetheless elects to meet them risks a result worse than claiming at the reduced tax credit rate.

Do the existing rules create the optimal incentives?

Some of the most common compliance problems highlight an important policy issue. It is very much in the interests of both taxpayers seeking clean economy ITCs and governments encouraging labour requirements compliance that any deficiencies that taxpayers become aware of be “curable,” in the sense of taxpayers having some avenue for taking corrective steps that both meet the relevant tax policy objectives and are deemed to constitute “compliance” with the labour requirements generally and the compensation element of the prevailing wage requirements specifically. If taxpayers are left in the position of finding compliance deficiencies that they are ready and willing to fix but that either:

they are practically unable to fix, for reasons outside their control; or
if fixed in a substantive sense, do not technically constitute full “compliance” with the labour requirements,

whatever time and effort they have spent trying to comply with the labour requirements is potentially for naught:

if such a taxpayer elects to meet the labour requirements and claims the regular tax credit rate, the danger is that the CRA applies s. 127.46(9) on the basis that the taxpayer did so “knowing” that it did not pay 100 per cent of the full amount required to be the “prevailing wage”, or paid it but in some way not within the legislative definition of “compliance”; and
alternatively, such a taxpayer must absorb the cost of claiming the reduced tax credit rate on the taxpayer’s entire qualifying expenditure for the year.

The problem is that the application of s. 127.46(9) is binary: it either applies to the taxpayer’s entire claim for a particular clean economy ITC in a given year, or it doesn’t apply at all. As a result, a taxpayer who knows, or perhaps merely suspects, that any amount of non-compliance with the labour requirements has occurred and remains unremedied at the time the ITC claims form is completed takes the risk that s. 127.46(9) will apply to their entire clean economy ITC claim for the year. Put simply,

the cost of suffering either a 10 per cent or 15 per cent reduction in the taxpayer’s ITC claim for the year bears no relationship (and may be completely disproportionate) to the degree of labour requirements non-compliance; and
no legislative safety valve exists for a taxpayer who wants to correct a known or suspected compliance deficiency but cannot, for whatever reason.

There is no explicit discretion within the legislation for the CRA to waive or ignore situations where, despite making good-faith efforts to achieve 100 per cent compliance, at the time the taxpayer makes its ITC claim it knows or has very good reason to believe compliance has been less than perfect, e.g., some number of covered workers have been paid something less than the prevailing wage for some number of work days. While a particular CRA auditor ultimately reviewing the claim might exercise such discretion, the consequences of that not happening are so severe as to make it completely impractical to claim the regular tax credit rate and risk s. 127.46(9) applying in the hope of that discretion. Moreover, most clean economy ITC-eligible projects of any size are going to be audited by an accounting firm that will force a taxpayer in such circumstances who claims the regular tax credit rate to report an uncertain tax position or a reserve in their financial statements, which will be completely unacceptable to lenders and other stakeholders. As such, many taxpayers in this position who cannot know with confidence that all labour requirements non-compliance they know of, or they believe is likely to exist, can somehow be remedied will simply forego trying to remediate any non-compliance and just claim at the reduced tax credit rate.

This is a lose-lose outcome for taxpayers and government alike if the result is that no matter how much time and effort the taxpayer has put in towards achieving full compliance, a fairly de minimis amount of known non-compliance can effectively disentitle a taxpayer from millions or tens of millions of dollars of clean economy ITCs, by forcing claims at the reduced tax credit rate. On a larger project, such situations can easily occur, which can in turn incentivize a taxpayer at the outset of a project to not bother incurring the cost and effort of trying to achieve labour requirements compliance at all, and just accept the reduced tax credit rate, a result that benefits no one and does not achieve the policy objectives of the labour requirements.

Suggested legislative improvements

Taxpayers who know or suspect they have a compliance issue and want to fix it deserve to be treated differently from those who don’t care or who make minimal compliance efforts and claim the regular tax credit rate anyway. Viewed within the overall tax policy context of wanting to provide fiscal support to green economy projects while generating well-paying jobs in Canada, it seems unfair, and counterproductive, to deny the regular tax credit rate to taxpayers who become aware of a compliance deficiency before they file their ITC claims and are willing to remedy it, but cannot do so in a way that constitutes compliance within the meaning of s. 127.46.

There are at least two ways in which the labour requirements could usefully be amended to better achieve the government’s underlying tax policy objective of encouraging taxpayers to pursue labour requirements compliance on clean economy projects while providing taxpayers with greater certainty and fairness:

provide a mechanism to remedy known or suspected compliance deficiencies before the time the taxpayer makes its ITC claim for the year that is deemed to bring the taxpayer into labour requirements “compliance”, so as to allow the taxpayer to claim the regular tax credit rate without fear of s. 127.46(9) applying; and
eliminate the all-or-nothing consequences facing taxpayers legitimately trying to address compliance deficiencies, and make the consequences of non-compliance meeting the K/GN Standard proportionate to degree of non-compliance.

As to the first point, effectively what is required is some mechanism whereby a taxpayer who has made reasonable efforts to achieve full compliance and finds itself at a dead end can take action that is deemed to constitute compliance with the prevailing wage requirements. For example, the U.S. version of the prevailing wage requirement in 26 CFR § 1.45-7 includes such relief in some cases. Specifically, the following rule in § 1.45-7(c)(1)(v) applies:

Special rule for laborers and mechanics who cannot be located. A taxpayer will be deemed to have paid a correction payment, under this paragraph (c)(1), to a laborer or mechanic who cannot be located if the taxpayer can establish that correction payments have been made. A taxpayer may establish that correction payments have been made by demonstrating compliance with the applicable State unclaimed property law and all Federal and State withholding and information reporting requirements with respect to the payments.

In its simplest form, such a mechanism could be an addition or appendix to the ITC claims form whereby the taxpayer self-reports any known compliance concerns with the compensation element of the prevailing wage requirements, much like a disclosure schedule for representations and warranties in a share purchase agreement operates. If considered necessary or desired, such mechanism could include paying estimated amounts to the CRA or a trusted third party, although this may not really be needed given the existing consequences for “normal” non-compliance. In either case, self-reported compliance concerns would be deemed to be outside the scope of s. 127.46(9), and the “normal” sanctions for non-compliance (i.e., the s. 127.46(6) per diem tax and s. 127.46(11) obligation to pay top-up amounts) could be made applicable. This seems like a simple and costless way in which the government can incentivize taxpayers to do the right thing and pursue labour requirements compliance without penalizing those who have taken reasonable steps towards compliance (the attestation element of the prevailing wage requirement already establishes this baseline) but are aware of potential deficiencies.

Such action would go a long way towards relieving the risk of disproportionately adverse consequences from conduct that is found to reach the K/GN Standard. However, the binary, all-or-nothing nature of s. 127.46(9) remains potentially draconian, and this seems needlessly punitive. Gross negligence penalties in s. 163(2) based on the same K/GN Standard apply on an issue-by-issue basis, rather than to the taxpayer’s entire tax owing for the year. Some consideration could usefully be given to limiting the scope of s. 127.46(9) to something more proportionate to the scope of the taxpayer’s knowing or grossly negligent conduct, either by expressly amending the consequences of that provision to that effect or at least creating a statutory authority within its text to give the CRA discretion to reduce its impact in appropriate circumstances. Not all conduct meeting the K/GN Standard is equal and ensuring that the crime fits the punishment is a reasonable and appropriate result that does not dilute the deterrence effect on those who are truly bad actors seeking to take advantage of a relatively generous tax expenditure program.

Smoot-Hawley revived: a never-before-used Depression-era law is invoked against Canadian trade

Mon, 27 Jul 2026 00:00:00 Z

“Anyone, anyone?”

Mr. Lorensax, the Economics Teacher

On July 20, 2026, the president of the United States signed three proclamations covering motor vehicles, alcoholic beverages and dairy, imposing additional 50 per cent tariffs on Canadian goods said to account for roughly US$20 billion in annual imports. Although there is some question about exactly how many of the listed products Canada exports into the United States, and how much, if we take that figure at face value, it would be just over five per cent of the US$380 billion in goods U.S. private interests and public procurement authorities buy from Canadian exporters each year.

The accompanying fact sheet characterizes the measures as a response to Canadian “discrimination” against U.S. exports. The annexed lists deal with products ranging from wine and cement to furniture, textiles, machinery and hockey sticks, and thus extend well beyond the three named sectors. The duties purport to apply to goods entered for consumption on or after 12:01 a.m. ET on Aug. 19, 2026.

Like the section 232 tariffs, the new measures apply regardless of CUSMA origin. This means that the “rule of origin” shield that has protected the majority of Canadian exports from IEEPA and section 122 tariffs since March 2025 does not apply.

And, of course, like the IEEPA or the section 122 tariffs, the legal authority invoked, Section 338 of the Tariff Act of 1930, has never before been used to impose tariffs in its near century on the statute books.

This explainer situates the new measures within the full arc of the dispute, which we have tracked since before the first tariff proclamation was signed, canvasses Canada’s responses, and assesses what Section 338 is, why it was chosen, and where this goes next.

The U.S. measures: Threats and tariffs since the “fentanyl” announcement

The current dispute dates to Nov. 25, 2024, when the then president-elect announced that among his first executive acts would be a 25 per cent tariff on all Canadian and Mexican goods, tied to fentanyl and the border. Our analysis at the time drew on the 2018 steel and aluminum experience to anticipate what followed: unilateral measures, retaliation, remission frameworks and negotiation under duress. What we did not anticipate was quite how many statutory vehicles the exercise would consume.

a. The IEEPA phase (February 2025 – February 2026)

On Feb. 1, 2025, the president signed Executive Order 14193: “Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border” imposing a 25 per cent tariff on nearly all Canadian goods (10 per cent on a defined set of energy resources), invoking the International Emergency Economic Powers Act. Following a negotiated 30-day suspension (Executive Order 14197), the tariffs took effect March 4, 2025. A critical feature emerged days later: goods qualifying for preferential treatment as CUSMA-originating were exempted. That carve-out transformed origin compliance from a duty-savings exercise into the difference between zero and 25 per cent and, because a substantial share of Canadian exports had historically entered under MFN rates without claiming preference (where MFN was already zero, certification cost outweighed benefit), it sent companies scrambling to qualify goods, assemble certifications and document regional value content for the first time.

b. The Section 232 sectoral architecture (2025–2026)

In parallel, the administration built out sectoral tariffs under Section 232 of the Trade Expansion Act of 1962, the national-security authority, on steel and aluminum (March 2025), automobiles and parts (Proclamation 10908, effective April 3, 2025, for vehicles and by May 3, 2025, for parts, with a temporary exemption for CUSMA-eligible parts pending a content-based assessment system), copper, and later medium- and heavy-duty vehicles (October 2025), timber and lumber, and pharmaceuticals. Crucially, none of the foregoing comes with a standing exemption for CUSMA-compliant goods.

The auto measures came with their own relief valve: an “import adjustment offset” of 3.75 per cent of the MSRP of U.S.-assembled vehicles in year one, stepping down thereafter, which is a regime that has since expanded to the medium- and heavy-duty sector. In September 2025, the U.S. Department of Commerce added a petition process allowing U.S. producers to seek expansion of the Section 232 autoparts scope, an accretion mechanism that continues to pull new tariff lines into coverage.

c. Learning Resources and the post-IEEPA scramble

On Feb. 20, 2026, the U.S. Supreme Court held in Learning Resources, Inc. v. Trump that IEEPA does not authorize broad-based import tariffs, invalidating the centrepiece of the 2025 architecture. As we wrote at the time, the decision left the availability, timing and mechanics of refunds uncertain. Businesses that paid IEEPA-based tariffs were advised to assess steps to preserve refund rights, particularly where entries had not yet liquidated. That advice has aged well, and it applies with equal force to what follows.

The administration’s response was a statutory scramble: temporary 10 per cent across-the-board tariffs under Section 122 of the Trade Act of 1974, capped at 150 days absent congressional extension and largely exempting CUSMA-compliant goods. Those tariffs expire this week. The administration also accelerated its Section 301 investigations. We flagged in March that Section 301, with its USTR investigations, consultations, and findings, would become the workhorse for targeted action; it has since produced 25 per cent tariffs on Brazil and forced-labour-related measures targeting Canada. But Section 301 takes time and process. Section 338, as we discuss below, requires neither.

One further development frames everything: earlier this month, at the first joint review, the United States declined to renew CUSMA in its current form. The agreement remains in force, but the non-renewal opens rolling annual reviews that could run to the agreement’s 2036 sunset and converts every U.S. tariff measure into negotiating leverage for that process.

Canadian responses

d. Measures imposed, and removed

Canada responded swiftly:

March 4, 2025. Twenty-five per cent counter-tariffs on C$30 billion in U.S.-origin goods, including food products, wine, spirits, beer, appliances, apparel, cosmetics, pulp and paper, with a second phase to expand coverage to C$155 billion. The tariffs applied only to goods originating in the U.S. under the CUSMA marking rules, a mirror image of the origin logic on the U.S. side.
March 12, 2025. C$29.8 billion in counter-tariffs responding to the U.S. steel and aluminum measures.
April 9, 2025. Twenty-five per cent surtaxes on non-CUSMA-compliant U.S. fully assembled vehicles and certain parts, the auto countermeasures and associated quota administration that the U.S. motor-vehicles proclamation now cites as “discrimination”.
Relief in parallel. From the outset, Ottawa paired retaliation with a remission framework under which importers could seek relief where inputs could not be sourced domestically or from non-U.S. suppliers, or in other exceptional circumstances with severe economic impacts, the same two-ground structure we saw in 2018. The United States Surtax Remission Order (2025) granted six-month remissions for manufacturing, food and beverage packaging, and public health and safety inputs (later extended); a performance-based remission framework supported automakers maintaining Canadian production; and the Large Enterprise Tariff Loan Facility provided liquidity.
Sept. 1, 2025. The pivot: Canada removed retaliatory tariffs on CUSMA-covered U.S. goods, roughly 90 per cent of U.S. imports by coverage, to match the U.S. exemptions and restart negotiations, while maintaining countermeasures on steel, aluminum and autos pending resolution of the corresponding Section 232 tariffs.
Dec. 26, 2025. Canada tightened steel tariff-rate quotas against global imports, reducing quota levels for non-FTA countries to 20 per cent of 2024 volumes, protecting domestic producers from supply diverted by U.S. measures, while honouring the CUSMA carve-out.
Provincial measures. Nearly every provincial and territorial liquor authority delisted U.S. alcohol from public shelves, the measure the alcoholic-beverages Proclamation now targets, and to which we return below.

e. The dispute settlement track

Canada also litigated. In March 2025, Canada requested WTO consultations on the IEEPA and steel/aluminum tariffs; on April 3, 2025, it initiated WTO dispute proceedings challenging the Section 232 auto tariffs as inconsistent with the GATT 1994, including the U.S.’s bound tariff commitments under Article II and MFN obligations under Article I. The U.S. response was telling: it invoked Article XXI, asserting that national-security measures are self-judging and beyond the reach of WTO dispute settlement, a position panels have repeatedly rejected, but which the U.S. can maintain indefinitely because the Appellate Body’s paralysis lets it appeal any adverse panel report “into the void.” The consultations remain, formally, pending. The merits are strong; the remedy is the problem.

f. The search for diversified trade

The track for Canadian trade diversification has been quieter but real: more than 20 new economic and security partnerships since early 2025; the September 2025 strategic-industries measures; public consultations on CUSMA (September 20 to November 3, 2025) feeding Canada’s positions for the joint review; and sustained outreach to the EU, the U.K., and the Indo-Pacific under existing agreements. The results are measurable if modest: the U.S. share of Canadian goods exports fell from nearly 76 per cent in 2024 to just under 72 per cent in 2025. Diversification is a decade-long project, but the effects should prove noticeable quarter to quarter.

The new measures

a. Scope

Each of the three July 20, 2026, proclamations imposes an additional 50 per cent ad valorem duty on a distinct annex of HTSUS tariff lines applicable to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. ET on Aug. 19, 2026, the 30-day minimum lead time the statute itself requires. Key parameters:

No CUSMA carve-out. The duties apply whether or not goods qualify as originating. This severs, for the first time, the link between origin compliance and tariff protection that has structured the entire dispute since March 2025. A valid certification of origin is simply irrelevant to a covered line.
Coverage well beyond the named sectors. Although the three proclamations are framed around autos, alcohol and dairy, the annexes reach foodstuffs, wood products, paper, textiles, machinery, furniture and consumer goods. The measures are calibrated to Canadian export exposure, not to the sectors in which discrimination is alleged. They comprise retaliation across the tariff schedule, not a mirror-image response.
Exclusions. Energy, potash, critical minerals, fish, and goods already subject to Section 232 duties are excluded. Note the phrasing: autos, steel, aluminum, lumber, and pharmaceuticals escape the Section 338 duties only because they already face Section 232 tariffs. This is an anti-stacking rule, not an exemption. The exclusions spare Canada’s largest export categories, which is why the measures reach “only” US$20 billion.
No sunset, and an escalation mechanism. Unlike Section 122’s 150-day cap, the proclamations advance an interpretation that the Tariff Act allows Section 338 tariffs to continue indefinitely unless the president reduces, modifies or terminates them. Section 338 also contains a further step no other modern tariff authority replicates: if the president finds the discrimination is maintained or increased after duties are imposed, the statute authorizes him to exclude the country’s products from importation altogether. The ceiling on escalation, in other words, is not a higher rate, it is an embargo.

b. What is Section 338?

Section 338 (19 U.S.C. § 1338) is a surviving fragment of the Smoot-Hawley Tariff Act, descended from Section 317 of the Tariff Act of 1922. This section authorizes the president to impose duties of up to 50 per cent on imports from a country he “find[s] as a fact” discriminates against U.S. commerce, directly or indirectly, by law, administrative regulation or practice, in a manner that disadvantages U.S. commerce relative to that of third countries, with the duties calibrated to offset the resulting burden. There is no public record of tariffs actually imposed under the provision since at least 1949. The provision was conceived for a world of bilateral tariff bargaining, before the GATT, before MFN as a multilateral norm, before trade agreements with built-in dispute settlement, and its anachronisms are now glaring:

“Discrimination” is undefined. In a world of MFN obligations, preferential agreements that discriminate by design (every FTA treats parties better than non-parties, that is the point), and treaty-sanctioned countermeasures, the term is doing enormous unexamined work. The measures Washington complains of are themselves responses to prior U.S. tariffs, many imposed in violation of CUSMA. Whether lawful countermeasures can constitute “discrimination” under a 1930 statute is, to put it gently, open.
The dairy grievance has already been litigated, under CUSMA. The United States twice challenged Canada’s dairy TRQ allocation practices under CUSMA Chapter 31. The first panel (2021) found Canada’s process of reserving TRQ pools inconsistent with the agreement. Canada revised its practices, and the second panel (2023) largely rejected the renewed U.S. claims. The dairy Proclamation thus recasts, as unilateral “discrimination,” a grievance the U.S. pursued through the agreed mechanism and substantially lost. The comparison to EU access under CETA misses the mark: differential treatment across trade agreements is what trade agreements do.
The provincial dimension. The alcoholic-beverages Proclamation attributes to “Canada” the demarketing decisions of provincial liquor monopolies. State attribution of sub-federal measures is familiar terrain in trade law. GATT Article XXIV:12 and CUSMA both address it through undertakings to engage in consultations in such circumstances. A presidential “finding of fact” that sweeps in the purchasing decisions of provincial Crown retailers, without any collaborative discussion or investigative process, compounds the statute’s core due-process problem.
The ITC’s role has never been tested. Section 338 sits in the part of the Tariff Act concerning the International Trade Commission (ITC) and assigns the Commission a duty to keep itself informed of discrimination and bring matters to the President’s attention with recommendations. Whether that is a procedural prerequisite or merely an advisory channel is unresolved. The Proclamations proceed on presidential findings alone, with no apparent ITC process.
The offset mismatch. The statute directs duties calibrated to offset the burden on U.S. commerce. The White House’s own figures put the alleged injury at roughly US$5.6 billion in lost auto exports and US$582 million in alcohol. A uniform 50 per cent rate, the statutory maximum, applied to US$20 billion in products largely unrelated to the affected sectors sits uneasily with a remedial, offset-based design.
Implicit supersession. There is a respectable argument that Section 338 was superseded by the modern, process-laden authorities Congress enacted decades later, Section 301 in particular, which occupies precisely the same field (foreign practices that burden or discriminate against U.S. commerce) but conditions action on USTR investigation, consultation, and findings. On this view, reading Section 338 as a process-free bypass renders Congress’s later procedural architecture optional.

Prospects

U.S. courts. Litigation is certain, and Learning Resources frames it: a broad, undefined, never-used delegation invoked for sweeping economic measures is the fact pattern that attracts major-questions scrutiny. The government’s position is not without foundation. Section 338, unlike IEEPA, expressly speaks of duties, expressly caps them at 50 per cent, and expressly places the power in the hands of the President. But the missing ITC process, the elasticity of “discrimination,” the offset mismatch, and the supersession argument all offer footholds.

For affected entities, the practical lesson of the IEEPA litigation is that real remedies may not emerge quickly from the court system. The Supreme Court vindicated the challengers in Learning Resources, and yet the refund mechanics remain unresolved months later.

Trade law. Fifty per cent duties on originating goods are flatly inconsistent with U.S. tariff commitments under CUSMA and exceed U.S. bound rates under GATT Article II; applied to Canada alone, they raise Article I MFN questions. Expect Canada to supplement its pending WTO consultations and to consider CUSMA Chapter 31 proceedings, where, unlike at the WTO, panel reports cannot be appealed into the void, and where Canada’s success in the dairy TRQ disputes shows the mechanism can work. The constraint is time: panels take the better part of a year at best. The remedy is prospective, and CUSMA itself is under renegotiation, a negotiation in which these tariffs are, transparently, leverage.

The negotiating table. The USTR statement is explicit that Canada’s sin is retaliation: only Canada and China responded to the 2025 tariffs with countermeasures rather than negotiated deals. The Section 338 action is thus designed, at least in part, to price retaliation itself, and its embargo endgame is the threat that gives the pricing teeth. Ontario Premier Doug Ford has urged a dollar-for-dollar response; the prime minister’s statement calls the measures a direct violation of CUSMA while signalling readiness to engage intensively. Ottawa’s dilemma is acute: the domestic politics of the past 18 months reward firmness, but Section 338’s escalation mechanism means counter-retaliation invites a finding that discrimination has “increased.” Expect Canada to pursue all three tracks at once: a calibrated response, dispute settlement and an intensified push at the CUSMA table, with the Sept. 1 precedent (concede the symbolic but hold the sectoral tariffs) as the likely template.

What businesses should do before August 19

The 30-day window is short, and duties attach based on the date of entry for consumption, not order, shipment or border-crossing dates for goods in transit. Canadian exporters and U.S. importers of Canadian goods should:

Map exposure against the annexes at the HTSUS line level. Coverage does not always track sector intuition. Classification determinations may now determine whether a good faces a tariff of 0 or 50 per cent. See our overview on goods classification and CUSMA rules of origin.
Do not rely on CUSMA origin, but do not abandon it. Origin provides no shelter from Section 338 duties but remains important for the Section 122 regime’s CUSMA exemption while it lasts, Canada’s countermeasures and any negotiated resolution.
Confirm the interaction with Section 232. Goods subject to Section 232 duties are excluded from Section 338, an anti-stacking rule that makes scope determinations under the 232 programs, including the expanding auto-parts petitions and the offset regimes, newly consequential.
Accelerate entries where commercially feasible. Goods entered before 12:01 a.m. ET on Aug. 19 escape the duties. Warehouse withdrawals count as entries. Inventory sitting in bonded warehouses should be evaluated now.
Review contracts and pricing. Tariff-allocation clauses, price-adjustment mechanisms, hardship and force majeure provisions, and Incoterms determine who bears a 50 per cent duty. Revisit both existing agreements and templates and, as we have advised since the first round, build express tariff language into new contracts rather than litigating silence later.
Preserve refund rights from the first entry. Document duty payments, monitor liquidation, and consider protests.
Monitor Ottawa. Canadian counter-measures, remission frameworks (with their two-ground test and documentary template), and support programs have followed every previous round of U.S. action. Businesses that assembled remission files in 2025 should keep them current; those that did not should start.
Engage. CUSMA consultations, remission processes, and any U.S. comment opportunities are channels through which affected businesses shaped outcomes in earlier rounds, including the September 1 removals and the exclusion architecture itself.

BLG’s International Trade and Investment group is monitoring the annexes, the litigation, and any Canadian response, and has advised clients through every phase of this dispute, including on origin qualification, remission requests, classification and scope determinations, contractual risk allocation, and refund preservation. For assistance, contact any member of our team, and follow developments on our Tariffs and Trade Resource Centre and The Tariff Home Companion podcast.

Cross-examining receivers, monitors and trustees in Alberta insolvency proceedings: An exceptional remedy

Fri, 24 Jul 2026 00:00:00 Z

Court-appointed receivers, monitors and trustees play a central role in Canadian insolvency proceedings. As officers of the court, they are expected to act independently and impartially, and in accordance with their statutory and court-ordered duties. Given this role, a recurring question in Alberta insolvency practice is whether parties may cross-examine a court officer on the contents of a report.

There is a clear general principle in Alberta: receivers, monitors and trustees are not ordinarily subject to cross-examination on their reports, and any such examination is exceptional rather than routine. Courts retain discretion to permit questioning where circumstances warrant, but applicants must demonstrate a legitimate and compelling basis for doing so.

The general rule: Cross-examination is exceptional

Alberta courts have consistently recognized that receivers and monitors are officers of the court whose neutrality should be protected. As a result, they are not generally subject to questioning absent unusual or exceptional circumstances. In Coast Automotive Group Inc (Re), the Alberta Court of Appeal reaffirmed that parties seeking to examine a monitor must establish exceptional circumstances before further questioning will be permitted. The Court emphasized that officers of the court are entitled to protection from irrelevant or improper questioning and that their neutrality should not be compromised through unnecessary involvement in adversarial disputes.

This principle reflects the broader policy objective of ensuring that court officers can perform their duties without becoming embroiled in litigation between stakeholders or being subjected to fishing expeditions designed to support collateral claims.

Cross-examination of receivers

The leading Alberta authorities concerning receivers stress that examination rights are limited and must be tied to specific concerns about the receiver’s conduct or reports.

In Re Big Sky Living Inc. (Bankrupt), the Court held that a party seeking to examine a receiver must provide cogent or compelling reasons and identify the particular conduct at issue. Mere dissatisfaction with a receiver’s actions or generalized allegations will not suffice. The Court adopted the criteria in Re Ravelston Corp., recognizing that a court officer may be examined in unusual circumstances, particularly where the officer refuses to co-operate in clarifying a report or declines to provide reasonable explanations regarding matters contained in it.

Importantly, the Court observed that formal cross-examination is often unnecessary because clarification can frequently be achieved through less intrusive means, such as written questions, correspondence or informal discussions.

A similar approach was taken in Edmonton Region Community Board v Aboriginal Partners & Youth Society. There, the Court held that only legitimate questions directed at clarifying statements in a receiver’s reports or explaining the receiver’s conduct should be permitted. The Court expressly cautioned against allowing examinations to become fishing expeditions or mechanisms for disgruntled stakeholders to build claims against the receiver. However, it acknowledged that questions genuinely aimed at obtaining information related to statements made in a receiver’s reports may be appropriate.

Accordingly, while examination of a receiver is possible, Alberta courts require a focused and demonstrably legitimate purpose before permitting it.

Trustees in bankruptcy: A slightly different framework

Trustees in bankruptcy stand in a somewhat different position because the Bankruptcy and Insolvency Act (BIA) expressly provides that a trustee’s report constitutes evidence on an application for a bankrupt’s discharge. Because trustee reports may significantly influence the outcome of a discharge hearing, courts have recognized circumstances in which examination may be appropriate.

In Klapstein, Re, the Court held that a bankrupt may seek to examine a trustee pursuant to s. 163(2) of the BIA where a serious dispute exists regarding the contents of the trustee’s report. The Court acknowledged that such examinations may be justified when concerns have been raised in a timely and substantive manner. Nevertheless, the Court emphasized that examination remains a matter of judicial discretion and is not an automatic right.

Thus, although trustees may be more susceptible to examination than receivers or monitors due to the evidentiary status of their reports, the applicant must still establish a legitimate reason for the examination and persuade the court that it is necessary in the circumstances.

Conclusion

The Alberta authorities establish a consistent theme across receiverships and bankruptcies: court-appointed insolvency professionals are not ordinarily subject to cross-examination on their reports. Receivers, monitors and trustees are officers of the court whose neutrality and independence warrant protection. Consequently, parties seeking to examine them must demonstrate more than disagreement with a report or a desire for broad discovery.

Cross-examination may be permitted where there are specific and exceptional circumstances, such as a genuine need to clarify material contained in a report or to address a serious dispute supported by particularized concerns. However, fishing expeditions, collateral attacks and attempts to draw court officers into adversarial disputes will generally be rejected. The governing principle remains that examination is the exception, not the rule.

One step closer to harmonization: CIRO's proposed Incorporated Approved Person Compensation model

Thu, 23 Jul 2026 00:00:00 Z

The Canadian Investment Regulatory Organization (CIRO) has published rule amendments to harmonize advisor compensation (the Amendments). Following CIRO’s 2024 position paper that consulted on three potential regulatory approaches to allow payment of advisor compensation to advisor-owned corporations for all CIRO-regulated dealer members (Dealers), the Amendments propose to adopt the Incorporated Approved Person compensation option.

In a material shift from the 2024 proposals, under the proposed Amendments, both ancillary activities and regulated Canadian financial services sector activities can be conducted by the advisor’s corporation (Incorporated Approved Person) on behalf of the sponsoring Dealer, subject to certain constraints. CIRO views the proposed Amendments as addressing the lack of flexibility, consistency and tax certainty under the current directed commission model, which will be phased out.

We encourage firms and advisors to review the potential impact of the proposed Amendments on their business model and provide feedback to CIRO by the November 6 comment deadline.

We invite you to REGISTER for our webinar on September 22, 2026, from noon to 1 p.m. EST, during which we will share additional insights on the proposed Amendments.

What the proposed Amendments do

The proposed Amendments are designed to harmonize CIRO’s advisor compensation rules by:

Repealing the directed commission arrangement option for mutual fund dealers’ client-facing Approved Persons. This option is currently available to client-facing advisors with mutual fund dealer firms or firms dually registered as both mutual fund dealers and investment fund dealers;
Retaining the current option for advisors to be either employees or agents of their Dealer; and
Introducing the option that all client-facing advisors may adopt an Incorporated Approved Person arrangement with their sponsoring Dealer, which would allow permitted regulated Canadian financial services sector activities, and ancillary activities, to be carried out by the Incorporated Approved Person.

While Dealers are not required to make the Incorporated Approved Person option available to their advisors, CIRO notes that there may be competitive advantages in terms of attracting and retaining talent for those Dealers who do make it available, versus Dealers that do not provide this option.

What does the Incorporated Approved Person model entail?

The Amendments propose the following requirements in connection with the Incorporated Approved Person model:

Who can have an Incorporated Approved Person and for what purposes?

The individual associated with the Incorporated Approved Person must be a client-facing Approved Person of the sponsoring Dealer.
The Incorporated Approved Person must be registered in the required category (or exempt from registration) in the applicable Canadian jurisdictions in which it operates.
An individual using an Incorporated Approved Person must be approved by CIRO (to ensure there is a chain of accountability between CIRO, the Dealer and the Approved Person).
The Incorporated Approved Person may only carry out activities that have been approved in advance by the Dealer, are not contrary to securities laws and do not bring the industry into disrepute. The activities are limited to being:
- Ancillary to the activities performed by the Incorporated Approved Person on the Dealer’s behalf; or
- Regulated Canadian financial services sector activities, provided the Approved Person is a qualified individual financial services advisor in the Canadian jurisdiction where the activities are being performed, who is not prohibited from engaging in such activities.

CIRO is requesting stakeholder feedback on the appropriate scope and prohibitions of the activities that can be performed, whether more than one client-facing Approved Person sponsored by the Dealer should be able to be employed by the Incorporated Approved Person, and any associated conflicts of interest that should be considered and managed.

Relationship between Approved Person, Incorporated Approved Person and Dealer

The proposed Amendments prescribe the key terms of the written agreement that will be required between the Incorporated Approved Person, the Dealer and the individual Approved Person. However, we anticipate that tax considerations will drive the structure of these tripartite agreements and advice should be sought at the outset to ensure that the desired tax benefits are able to be realized.

CIRO prescribes the following contents for the agreement:

Compliance with all applicable laws, securities laws and CIRO requirements (indeed, CIRO retains the discretion to require a Dealer to obtain a legal opinion in support of this compliance);
The Approved Person must conduct all securities and derivatives-related business for the Dealer through the Incorporated Approved Person;
The Dealer must be responsible for supervision of the Approved Person and the activities of the Approved Person conducted for the Dealer through the Incorporated Approved Person;
The Approved Person must provide disclosure to impacted clients of the nature of the incorporated advisor relationship; and
The Incorporated Approved Person must obtain prior approval from the Dealer before engaging in activities other than those being conducted on behalf of the Dealer.

Dealers are required to supervise each Incorporated Approved Person as they would an employee, are responsible for ensuring that the Approved Person and the Incorporated Approved Person comply with applicable laws and CIRO requirements, and are liable to clients and other third parties for the Approved Person and Incorporated Approved Person’s conduct for activities performed on behalf of the Dealer.

We anticipate the adoption of an Incorporated Approved Person model will increase Dealers’ supervisory burden, as CIRO will expect adequate systems to approve, monitor and supervise Incorporated Approved Person activities and prevent unpermitted outside activities, a risk which may be greater under these new structures.

We may also see an uptick in client complaints of misrepresentations related to confusion about the legal relationship among the Dealer, the Approved Person and the Incorporated Approved Person. To mitigate this risk, Dealers will want to ensure clear and consistent client disclosure.

In the event that CIRO or a securities regulatory authority commences an investigation related to misconduct by the Approved Person or Incorporated Approved Person, or in the event the Dealer has reasonable grounds to believe that the Approved Person or Incorporated Approved Person has breached CIRO requirements or securities laws, the Dealer is permitted to immediately, without notice, assume direct responsibility for the impacted clients, to the exclusion of the Approved Person and Incorporated Approved Person. The Dealer is permitted to designate another qualified person to provide services to the impacted clients, and that person may receive remuneration that would otherwise have been paid to the Approved Person and the Incorporated Approved Person.

Legal structure of the Incorporated Approved Person

A single Approved Person is the only permitted voting shareholder of an Incorporated Approved Person. This Approved Person must also be the sole director. The voting shareholder, as well as family members who qualify as a “related person” to the voting shareholder under the Income Tax Act (Canada), can be non-voting shareholders.

Approved Persons sponsored by other Dealers, and anybody subject to sanctions, are prohibited from being a voting or non-voting shareholder of an Incorporated Approved Person.

CIRO poses several questions about the appropriateness of these shareholder/owner limitations, including whether non-client-facing Approved Persons who meet certain criteria should be permitted to conduct business through, and own voting or non-voting shares in, the Incorporated Approved Person.

Critical tax considerations

Tax considerations will be central to the viability and structure of any Incorporated Approved Person arrangement. In particular, the written agreements among the Dealer, the Approved Person and the Incorporated Approved Person will need to be carefully structured so that the services being compensated are properly provided through the Incorporated Approved Person and so the arrangement can withstand the security of the Canada Revenue Agency (CRA) and Revenu Québec and avoid negative tax consequences.

If the arrangement is off-side applicable tax rules, the consequences may not be limited to the Incorporated Approved Person: the individual Approved Person owner may be assessed personally, including where amounts paid to the Incorporated Approved Person are treated as having been directed, transferred or assigned by the individual Approved Person. The potential tax implications for the Incorporated Approved Person can be significant, including loss of deductibility of certain expenses, loss of access to favourable corporate tax rates, punitive tax treatment applicable to personal services businesses (PSB) and potential double taxation. When structured in accordance with applicable tax laws and the proposed Amendments, an Incorporated Approved Person can provide individual Approved Persons with considerable tax benefits including (i) deductions for certain expenses not available to an employee; and (ii) potential tax deferral on the income. For example, in Ontario, services income earned by an individual is subject to a tax rate of 53.53 per cent, whereas a corporation earning such income may be subject to a corporate tax rate of 12.2 (for income that qualifies for the small business deduction) or 26.5 per cent (for all other active business income). This income will be subject to further tax (at 47.74 per cent and 39.34 per cent, respectively) when paid to individual shareholders as dividends, resulting generally in tax integration when the income is ultimately distributed to the individual.

Dealers and Approved Persons should seek tax advice at the outset, prior to structuring the new relationship, as the tax analysis will drive key terms of the agreements, including the persons entering each agreement, the terms of each agreement, the allocation of services, the legal and factual relationship among the parties, and the documentation needed to support the intended tax treatment.

While the tax considerations in Québec generally mirror the federal rules, Québec-specific issues should also be considered, including the risk of PSB treatment, which must be analyzed in light of the Québec Taxation Act and the Civil Code of Québec. Moreover, Revenu Québec has repeatedly indicated that its concern is not the commission-sharing arrangement itself, but rather determining who is legally entitled to the remuneration based on the parties’ contractual arrangements. On that basis, Revenu Québec has audited a number of mutual fund advisors who allocated commission income to their corporations (using the ‘directed commission’ model), taking the view that the income remained personally attributable to the advisor for tax purposes. Whether this position will be revisited following CIRO’s proposed Amendments remains uncertain. Several reassessments issued by Revenu Québec are currently under objection and are being held for review by a Revenu Québec officer pending the outcome of a similar case before the Québec court.

Practical implications of the proposed Amendments

New corporations

When evaluating whether and how to make Incorporated Approved Person arrangements available, Dealers and advisors will want to assess:

Whether the tripartite agreement between the Dealer, the Approved Person and the Incorporated Approved Person will permit each party to have the desired level of control or flexibility.
The cost, resources, and other practicalities of structuring the arrangement in a way that is compliant with both securities regulatory expectations and tax requirements.
While the proposed Amendments are intended to provide greater flexibility for Approved Persons, the parties will need to carefully manage the allocation of risk and responsibility among the Dealer, the Approved Person and the Incorporated Approved Person. In particular, Dealers may face increased regulatory and litigation exposure as a result of being required to supervise the activities of an Incorporated Approved Person. Disputes could also arise over whether conduct was Dealer-related or whether it was outside of the Dealer-approved scope of activities for the Incorporated Approved Person.

Existing mutual fund dealer directed commission structures

Existing directed commission structures for representatives of mutual fund dealers will need to be assessed to determine:

Whether existing share ownership and director structures align with the requirements in the proposed Amendments.
How to restructure the existing corporation to comply with the proposed Amendments in a manner that is tax efficient.
Whether CIRO is proposing a sufficient transition period and transition guidance (given the remaining ambiguities) for existing directed commission corporations to become compliant Incorporated Approved Person arrangements.

CSA registrants: Portfolio managers and EMDs too?

While the Amendments are not proposed to apply to CSA-registered portfolio managers or exempt market dealers, such registrants should consider whether to advocate for the inclusion of a non-individual registration category being equally available to them.

The path ahead

We see a lengthy path ahead before the proposed Amendments can be enacted.

The extent of the Canada Securities Administrators’ (CSA) support for the proposed Amendments is as-yet unknown. Changes to securities law will be required, including to the securities legislation of various Canadian jurisdictions (Acts) and to National Instrument 31-103 – Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) to allow for advisor-owned Incorporated Approved Persons to carry out registrable activities and impose the corresponding regulatory obligations. Changes to the Acts will require provincial and/or territorial legislative changes by the relevant government, while changes to NI 31-103 will require public consultation, evaluation of the feedback, publication of finalized amendments and ministerial approvals. Currently, it is unclear whether changes to the Acts and NI 31-103 will (i) create an exemption from registration for Incorporated Approved Persons that carry out securities-related activities or, (ii) establish a new, less burdensome, non-individual registration category for Incorporated Approved Persons.

CIRO poses transition period questions in the proposed Amendments. Stakeholders will want to consider the extent of the efforts required to restructure, draft and negotiate these arrangements, as well as repaper policies and procedures to address the new requirements, and other considerations, to assess the sufficiency of the transition time proposed.

We urge Dealers and advisors to carefully consider how these proposed Amendments will apply to them and to provide suggestions and comments to CIRO by the November 6 comment deadline.

The Supreme Court clarifies Canada’s methods of medical treatment doctrine

Fri, 17 Jul 2026 00:00:00 Z

On July 17, 2026, the Supreme Court of Canada released its long-awaited decision in Pharmascience Inc. v. Janssen Inc., 2026 SCC 26, providing the most significant guidance in decades on the patentability of methods of medical treatment in Canada. While the Court ultimately upheld Janssen's patent, which the Court characterized as being for dosing regimens for formulations used to treat schizophrenia, the broader significance of the decision lies in its clarification of how subject matter should be assessed to determine if it defines non-patentable methods of medical treatment.

Background

The evolution of the method of medical treatment doctrine

Unlike many exclusions from patentability, the prohibition of patenting methods of medical treatment (MMT) does not appear anywhere in the Patent Act. Instead, it emerged through the common law, most notably from the Supreme Court's decision in Tennessee Eastman.

In Tennessee Eastman, the Court held that a surgical method did not constitute patentable subject matter because it related to the exercise of professional skill rather than an “art” within the meaning of the Patent Act.

Over the decades that followed, that reasoning expanded beyond surgical procedures, and Courts were increasingly asked whether therapeutic methods involving pharmaceuticals likewise crossed the line into unpatentable subject matter. While a new drug could constitute patentable subject matter, greater difficulty arose where patents claimed how a drug should be administered, particularly where treatment depended on dosage adjustments, treatment schedules, or patient-specific considerations.

In attempting to distinguish patentable pharmaceutical inventions from unpatentable methods of medical treatment, the Canadian Courts considered a variety of recurring factors when attempting to assess if a claim required the exercise of professional skill and judgement, including:

whether the claim recited a fixed dosage regimen or a range requiring adjustment;
whether treatment required ongoing individualized clinical decision-making; and
whether the claimed invention more closely resembled a vendible product than the exercise of a professional medical skill.

The difficulty was that professional skill and judgement is not referred to in the Patent Act itself and no single factor led to a comprehensive legal framework.

The dispute before the Supreme Court

The present dispute arose with respect to Janssen’s Canadian Patent No. 2,655,335, whose claims recite specific dosage regimens for paliperidone used in the treatment of schizophrenia. The patent teaches a dosing schedule involving the administration of particular loading and maintenance doses.

The Federal Court in Janssen Inc. v. Pharmascience Inc., 2022 FC 1218 recognized that the existing jurisprudence related to methods of medical treatment had largely developed around a distinction between fixed and variable dosing regimens. Under that line of inquiry, claims directed to specific dosage amounts and fixed administration schedules were generally considered patentable subject matter, whereas claims requiring a physician to select a dose or treatment schedule from within a range were more likely to be characterized as unpatentable methods of medical treatment. Although the Federal Court questioned the theoretical foundation of this dichotomy, it acknowledged that this remained the prevailing state of the law.¹

The Federal Court of Appeal (FCA) in Pharmascience Inc. v Janssen Inc., 2024 FCA 23 held, and what ultimately became the guiding rule until now, was that the fixed versus variable dosage distinction was not the correct test. Rather, the proper inquiry was whether use of the invention (not whether to use it) required the exercise of skill and judgement. Importantly, the Court of Appeal acknowledged that this assessment inherently turned on the particular claims and evidence in each case.²

At the heart of Pharmascience's appeals was the contention that Janssen's patented dosing regimen crossed the line from a patentable pharmaceutical innovation into an unpatentable method of medical treatment that attempted to monopolize a physician’s judgement on “how” and “when” to administer the drugs.

The Supreme Court’s analysis

Before turning to Janssen's patent itself, the Supreme Court addressed the broader question: Are methods of medical treatment non-patentable subject matter under Canadian law?

The Court's answer was unequivocal.

From the opening paragraphs of the decision, the Court repeatedly characterized the doctrine as settled Canadian law. For more than fifty years, Canadian courts have consistently treated methods of medical treatment as unpatentable subject matter, and the Court emphasized that no Canadian court has held otherwise. In language rarely seen on a question of patent doctrine, the Court noted that it was being asked to "disrupt this settled law" and declined to do so.³

Importantly, the Court rejected Janssen's submission that the MMT doctrine disappeared with the repeal of former section 41(1) of the Patent Act. The Court concluded that the doctrine has been reaffirmed repeatedly by subsequent jurisprudence, is rooted in the broader principle that professional skills are not patentable and has become an established part of Canadian patent law independent of the former statutory provision.

In doing so, the Court effectively closed the door on arguments that the prohibition on methods of medical treatment ceased to exist as a distinct exclusion following the repeal of former section 41(1) of the Patent Act.

Adopting the Federal Court of Appeal's framework for methods of medical treatment

Neither Pharmascience nor Janssen succeeded with their competing positions. Instead, the Court expressly endorsed the framework previously articulated by the Federal Court of Appeal, describing it as a "balanced approach" grounded in the purpose of the doctrine itself.

Under that approach, the ultimate question remains whether the claimed subject matter amounts to professional medical skill and judgment. Put differently, the inquiry is whether the claim seeks to "fence in" an area of medical practice.⁴

The Court emphasized that this assessment begins with purposive claim construction and focuses on the “real subject matter of the claim.”⁵ Citing the Federal Court of Appeal, the Supreme Court emphasized that what matters in this part of the analysis is substance, not form.⁶

Professional skill and judgement

Perhaps the most significant aspect of the decision appears in the Court's discussion of professional skill and judgment.⁷

The Court drew a distinction between whether a claimed invention amounts to professional medical skill and judgement, or whether professional medical skill and judgement would be used in selecting the invention for a particular use.

By way of example, the Court stated that a medical professional prescribing a drug to a patient exercised clinical judgement in deciding whether it was appropriate, but that does not itself make the drug unpatentable. Rather, it is the prescribing decision that is the unpatentable subject matter. Further, once selected, a medical professional may still need to monitor a patient and decide whether to continue, stop or alter treatment. The Court affirmed that the mere existence of those decisions does not render the treatment unpatentable subject matter.⁸

The test for methods of medical treatment⁹

The most significant contribution of the decision may be the Supreme Court's clarification of how the methods of medical treatment doctrine is to be applied. Although the Court declined to draw a bright line between patentable medical innovations and unpatentable methods of medical treatment, it endorsed the Federal Court of Appeal's approach and identified three key considerations to guide the analysis.

First, the need for professional skill and judgement in determining whether a treatment is appropriate for a patient will generally not affect its patentability. The decision to prescribe a treatment is distinct from the invention itself.

Second, the more a claimed invention requires tailoring to the circumstances of individual patients, the more likely it is to amount to a method of medical treatment. Conversely, inventions capable of broad application without individualized adjustment are less likely to constitute methods of medical treatment.¹⁰

Third, the analysis must remain connected to the rationale underlying the doctrine. The more a medical professional would naturally develop, refine, or improve the subject matter through ordinary professional practice, the more likely it is that the subject matter is a non-patentable method of medical treatment.¹¹

Importantly, the Court emphasized that these are not bright-line rules. Rather, they are guideposts in what the Court repeatedly described as a "factually suffused" inquiry.

Moving beyond the fixed-versus-variable dosage debate

Endorsing the Federal Court of Appeal's approach, the Court held that the fixed-versus-variable dosage distinction "skirts the ultimate issue" and is, at best, an evidentiary proxy for the real inquiry of whether the claimed invention amounts to professional medical skill and judgment.¹² A variable dosage regime is therefore not inherently unpatentable, nor is a fixed dosage regimen automatically patentable, subject matter.

Application to Janssen’s Patent

Applying these principles, the Court concluded that the subject matter of Janssen's claimed invention did not amount to professional medical skill and judgment. The claimed subject matter did not require the kind of individualized clinical decision-making that characterizes an unpatentable method of medical treatment. The claims therefore remained patentable subject matter, and the appeal was dismissed.

Implications

The Supreme Court’s decision confirms that methods of medical treatment remain excluded from patentable subject matter in Canada. At the same time, the Court held that a claim is not unpatentable merely because it concerns variable dosages or timing. The analysis remains fact-specific and turns on the substance of the claim, including whether implementing the claimed subject matter requires a physician or other health professional to exercise individualized skill and judgment. Claim form may be relevant to that assessment, but the decision does not suggest that form alone is determinative.

Le projet de loi C-31 propose des modifications à la Loi sur la production de défense et l’approvisionnement en défense

Wed, 15 Jul 2026 00:00:00 Z

Le 3 juin 2026, la Chambre des communes a terminé la deuxième lecture du projet de loi C-31, Loi n^o 2 d’exécution du budget de 2025 (projet de loi C-31), qui passera maintenant à l’examen du Comité sénatorial permanent des finances nationales. En plus de nombreux changements à la stratégie canadienne d’approvisionnement en matière de défense, le projet de loi C-31 prévoit des modifications à la Loi sur la production de défense, L.R.C. 1985, ch. D-1 (la LPD)¹.

Les changements proposés témoignent de l’importance que le Canada accorde à la défense et à la sécurité.

I. Changements dans les définitions et la portée – Gouvernement associé et services de défense

Le projet de loi C-31 propose notamment de modifier des définitions clés de la LPD, ce qui, du même coup, modifiera la portée de la loi. Globalement, les modifications visent à reconnaître des fonctions de défense et de sécurité lorsque le Canada participe à des initiatives de défense coopératives avec des gouvernements alliés « associés », ce qui vise maintenant expressément l’Union européenne et ses États membres. Elles élargissent aussi considérablement la définition de « service de défense », qui englobe tout ce qui est nécessaire ou utilisé pour la défense ou la sécurité nationales et tout ce qui est utilisé pour la production ou la fourniture de tels services.

Plus précisément, on propose :

de modifier la définition de « gouvernement associé » de façon à ce qu’elle englobe les gouvernements ou les organisations internationales partenaires en règle de l’OTAN ainsi que l’Union européenne et ses États membres²;
d’élargir la définition de « ouvrage de défense » de façon à ce qu’elle englobe les ouvrages relatifs à des communautés résidentielles situées sur des immeubles fédéraux et, de façon générale, les ouvrages « requis pour la sécurité nationale »³;
d’élargir la définition de « contrat de défense » de façon à ce qu’elle englobe les contrats conclus avec le gouvernement du Canada, ou avec un gouvernement associé, et qui porte « de quelque façon » sur des services de défense⁴;
d’ajouter une définition pour le terme « service de défense » englobant tout ce qui est requis ou utilisé en lien avec la défense ou la sécurité nationales ou avec des efforts concertés pour la défense ou la sécurité menés par le Canada et un gouvernement associé, les embarcations et tout ce qui est utilisé pour la production de ces choses⁵.

II. Pouvoirs du ministre

Aux termes de la version actuelle de la LPD, le « ministre » autorisé à agir en lien avec celle-ciest le ministre des Travaux publics et des Services gouvernementaux⁶. Le projet de loi C-31 propose que cela demeure le cas relativement à la partie 2 de la loi (qui concerne la réglementation de l’accès aux marchandises contrôlées), mais que, relativement à la partie 1 (qui concerne la fourniture de matériel de défense), il s’agisse du ministre désigné en vertu de l’article 3 de la Loi sur l’Agence de l’investissement pour la défense, une nouvelle loi que le projet de loi 31 propose d’édicter⁷. Cet autre ministre n’est pas nommé, mais il serait désigné par décret du gouverneur en conseil⁸.

Le projet de loi C-31 dispose aussi que les attributions conférées par la LPD ont préséance sur la Loi sur le ministère des Travaux publics et des Services gouvernementaux⁹.

L’article 312 du projet de loi clarifie les attributions du ministre, qui peut par ailleurs, avec l’autorisation du gouverneur en conseil, prendre pour le compte d’un gouvernement associé toute mesure que la loi l’habilite à prendre¹⁰. Cette disposition vise certainement les futurs partenariats en défense, comme l’Accord entre l’Union européenne et le Canada concernant la participation au titre de l’Instrument SAFE.

Le ministre peut aussi prélever sur le Trésor jusqu’à un milliard de dollars en lien avec (1) l’accumulation de stocks, (2) de l’aide financière et (3) l’acquisition de services de défense, de matériel de défense et d’ouvrages de défense¹¹.

III. Demandes de renseignements et accumulation de stocks

Le ministre peut demander de l’information sur le matériel de défense et les services de défense qu’une personne fournit ou envisage de fournir, notamment sur la source d’approvisionnement et sur les installations qui sont à la disposition de la personne qui fournit le matériel ou les services ou construit les ouvrages de défense¹². Ce type de demande peut être adressée à quiconque fournit des services de défense ou dont les activités commerciales sont susceptibles de convenir à la fourniture de services de défense¹³. Auparavant, ces demandes étaient limitées aux personnes fournissant du matériel de défense ou des ouvrages de défense¹⁴ – elles peuvent maintenant également viser les personnes qui fournissent des services de défense, dont la définition est très large.

Le ministre peut aussi accumuler des matières désignées dans plus de circonstances. Avant, l’accumulation de stocks était limitée aux matières désignées par le gouverneur en conseil comme étant indispensables aux besoins de la collectivité pour en prévenir la pénurie. Le projet de loi C-31 élargit ce pouvoir à toute chose qui est « indispensable aux besoins nationaux ou à ceux d’une collectivité au Canada ou ailleurs ou d’un gouvernement associé » en lien avec la défense nationale, la sécurité nationale et la sécurité économique¹⁵.

IV. Approvisionnement en défense

Plusieurs nouvelles dispositions et modifications touchent les fournisseurs potentiels des processus d’approvisionnement en matière de défense.

a. Aide financière

Le projet de loi C-31 propose d’élargir le pouvoir du ministre d’offrir de l’aide financière à des fins liées à la production, à l’approvisionnement ou aux investissements relativement à la défense nationale, ainsi qu’à des fins liées à du matériel de défense, à des services de défense ou à des ouvrages de défense et pour l’accumulation de stocks. Il peut s’agir de consentir des prêts, de faire des paiements anticipés, d’accorder des subventions ou des contributions, ou de conclure d’autres accords de nature financière, avec l’autorisation du gouverneur en conseil¹⁶.

b. Renseignements sur l’entreprise

Le projet de loi C-31 confirme qu’aucun renseignement recueilli sur une entreprise dans le cadre de la loi ne peut être communiqué sans consentement, sauf à un ministère qui en a besoin pour l’accomplissement de ses fonctions, aux fins de poursuite pour une infraction à la loi ou aux fins de toute autre procédure judiciaire (avec le consentement du ministre)¹⁷.

c. Exception relative à la sécurité nationale

Le projet de loi C-31 confirme que l’exception relative à la sécurité nationale peut être invoquée en lien avec un accord ayant trait au commerce intérieur ou international auquel le Canada est partie¹⁸. Parmi les accords pertinents se trouvent l’Accord de libre-échange canadien (pour le commerce intérieur), l’Accord économique et commercial global entre le Canada et l’Union européenne et l’Accord sur les marchés publics de l’Organisation mondiale du commerce.

De façon générale, l’exception relative à la sécurité nationale permet au Canada de déroger aux procédures normales d’un processus d’approvisionnement afin de protéger des intérêts de sécurité nationale (par exemple : approvisionnement non concurrentiel, restriction des protections procédurales offertes aux fournisseurs potentiels ou des recours possibles).

d. Approvisionnement concurrentiel en défense

Même s’il confirme que l’exception relative à la sécurité nationale peut être invoquée, le projet de loi C-31 prévoit aussi une exigence générale obligeant le ministre à mener un processus d’approvisionnement concurrentiel avant de conclure un contrat, sous réserve de certaines exceptions¹⁹.

Un processus concurrentiel n’est par exemple pas requis :

pour les contrats visant à répondre à un besoin opérationnel urgent;
lorsque l’omission est nécessaire pour conduire des opérations militaires, en lien avec des ouvrages de défense essentiels ou pour veiller à la sécurité nationale;
lorsqu’il est question de soutenir un secteur de l’économie du Canada qui est important pour la défense nationale, pour la sécurité nationale ou pour la sécurité économique;
pour les contrats visant du matériel ou des services de défense qui sont interopérables ou interchangeables avec du matériel, des services ou des ouvrages de défense du Canada ou d’un gouvernement associé;
pour les contrats visant une technologie sensible;
pour les contrats qu’une seule personne est en mesure d’exécuter;
pour les contrats qui, pour des raisons opérationnelles, visent à combler un besoin provisoire;
pour les contrats afférents aux contrats visant à combler un besoin provisoire;
pour les contrats visant la recherche, le développement et l’innovation concernant du matériel ou des services de défense;
pour les contrats visant du matériel ou des services de défense ayant fait l’objet de financement du Canada pour la recherche, le développement ou l’innovation;
pour les contrats devant être conclus avec une entité administrative, aux termes d’un accord ou d’un arrangement avec une entité administrative ou en vertu d’une procédure d’une organisation internationale dont le Canada est membre;
lorsqu’une exception prévue par un règlement pris en vertu de la Loi sur la gestion des finances publiques s’applique;
lorsqu’un règlement le prescrit.

Même en l’absence d’exception, le ministre peut exclure toute personne d’un processus d’approvisionnement concurrentiel s’il a des motifs raisonnables de croire qu’elle ou toute chose qu’il est proposé d’employer pose un risque pour la défense ou la sécurité nationales ou pour la sécurité publique. Il n’est pas tenu de fournir à la personne ainsi exclue les motifs de cette décision.

V. Règlements et examens futurs

Le gouverneur en conseil peut prendre des règlements, notamment au sujet des pouvoirs d’accumulation de stocks du ministre, de la fourniture de renseignements sur les coûts des contrats d’approvisionnement et de la procédure des processus d’approvisionnement concurrentiels, et pour fixer des conditions réputées faire partie intégrante des contrats d’approvisionnement en défense. Des règlements peuvent aussi prévoir d’autres détails et définitions pour les exceptions aux processus d’approvisionnement concurrentiels, par exemple sur le sens de « besoin opérationnel urgent », de « technologie sensible » et de contrat avec une « entité administrative »²⁰.

Le ministre serait tenu de procéder à un examen de la loi dans les trois ans suivant l’entrée en vigueur et de soumettre un rapport au Parlement²¹.

VI. Incidences des modifications à la LPD proposées par le projet de loi C-31

Les modifications proposées par le projet de loi C-31 n’ont pas encore été adoptées. Au moment de rédiger cet article, la deuxième lecture du projet de loi à la Chambre des communes était terminée et le projet était dans les mains du Comité sénatorial permanent des finances nationales.

On peut tout de même penser dès maintenant aux répercussions qu’elles auront sur les secteurs de la défense et de la fabrication de biens à double usage.

a. Meilleur accès au marché et plus de processus d’approvisionnement avec des gouvernements associés

L’ajout des gouvernements et des organisations internationales partenaires en règle de l’OTAN ainsi que de l’Union européenne (UE) et ses États membres à la définition de « gouvernement associé » est un signal clair de la volonté d’accentuer la coopération industrielle et de défense entre les alliés transatlantiques. Cette proposition s’ajoute à l’accord récent entre le Canada et l’UE donnant aux entreprises canadiennes un accès privilégié aux processus d’acquisition en défense financés au titre de l’instrument Security Action for Europe (SAFE).

De nouvelles occasions pourraient ainsi se présenter dans le secteur de la défense, particulièrement pour ce qui est d’accéder et de participer à des processus d’approvisionnement multinationaux et à des chaînes d’approvisionnement intégrées au titre de modèles comme l’instrument SAFE.

Cela dit, la participation aux processus d’approvisionnement menés par des alliés ou l’UE vient avec un lot de considérations réglementaires complexes. En plus des exigences canadiennes relatives à la sécurité nationale, à l’examen des investissements et à l’approvisionnement, les entreprises feront face à des attentes plus élevées en matière de conformité, d’interopérabilité et d’autorisation de sécurité. Selon la structure du processus d’approvisionnement, elles pourraient aussi être assujetties aux exigences des régimes d’approvisionnement et de sécurité du gouvernement allié. Il faudra savoir respecter ces cadres pour profiter des avantages de l’accès élargi au marché.

b. Portée élargie : services de défense

Comme l’application de la LPD a été élargie aux « services de défense » en plus du « matériel de défense » et des « ouvrages de défense », et à un plus grand nombre d’ouvrages liés à la défense, plus d’entités (y compris des fournisseurs de services, des entreprises du secteur des technologies et des fabricants de biens à double usage) ont accès à des processus d’approvisionnement et à des contrats régis par la loi. Vu l’importance accrue accordée à la protection de la collectivité et à la sécurité économique, les entreprises participant à la construction d’infrastructures clés et œuvrant dans des secteurs névralgiques de l’économie pourraient aussi être exposées à des occasions et à des demandes de renseignements découlant du régime de la LPD.

Si ces changements entrent bien en vigueur, un plus grand nombre de contrats gouvernementaux seront qualifiés de contrats de défense régis par la LPD. Ainsi, des entreprises qui ne sont pas habituellement considérées comme œuvrant dans la défense ou qui fabriquent des biens à double usage pourraient devoir donner de l’information sur leurs chaînes d’approvisionnement et leur capacité à fournir du matériel.

Les entreprises qui fournissent des services dans l’écosystème de défense, de même que celles qui souhaitent pénétrer le secteur ou participer à des approvisionnements en défense, doivent vérifier si leurs activités sont maintenant visées. Une évaluation précoce et une bonne préparation sont essentielles pour gérer un fardeau réglementaire plus lourd et plus complexe.

c. Centralisation des pouvoirs en approvisionnement

L’octroi à une seule entité de larges pouvoirs pour l’encadrement de l’approvisionnement en défense et sécurité nationale est un changement qui était fort attendu. La préséance donnée à la LPD par rapport à la Loi sur le ministère des Travaux publics et des Services gouvernementaux est probablement le changement le plus significatif proposé par le projet de loi C-31. Il pourrait entraîner un changement dans le rôle que jouent le ministre des Travaux publics et SPAC dans l’approvisionnement en défense. La centralisation de la prise de décisions pourrait permettre de réaliser des projets plus rapidement – surtout ceux qui sont urgents ou d’une grande importance stratégique – tout en améliorant la coordination et la cohérence des contrats d’approvisionnement d’envergure.

Ce nouveau modèle s’accompagnera toutefois probablement de nouveaux processus d’approbation et d’un cadre moins prévisible à court terme (le temps que les pratiques évoluent) que les parties prenantes devront apprivoiser.

d. Clarification de la distinction entre les processus d’approvisionnement concurrentiels et non concurrentiels

Si les modifications proposées clarifient que le processus d’approvisionnement en défense est par défaut concurrentiel, la longue liste d’exceptions – dont certaines sont très largement formulées – laisse croire que plusieurs ne le seront pas complètement.

La nouvelle structure de la LPD donne toutefois des indices sur la nécessité ou non d’un processus concurrentiel. Actuellement, l’exception relative à la sécurité nationale est généralement invoquée dans un approvisionnement en défense pour déroger aux exigences procédurales habituelles visant à assurer la concurrence entre des fournisseurs potentiels. Comme la norme est celle de l’applicabilité des exigences de concurrence, un processus non concurrentiel doit correspondre à l’une des exceptions établies. En évaluant la probabilité qu’une exception s’applique à un processus d’approvisionnement donné, les fournisseurs peuvent avoir une meilleure idée du déroulement de ce processus.

Certaines exceptions peuvent aussi ouvrir des portes. L’une d’elles concerne le soutien d’un secteur de l’économie canadienne lié à la défense, ce qui devrait créer des processus d’approvisionnement qui favorisent les fournisseurs canadiens ou excluent les fournisseurs non canadiens. Une autre concerne l’approvisionnement en matériel ou services de défense liés à la recherche et au développement, ce qui pourrait encourager la participation aux programmes et subventions du Canada en R et D. Enfin, l’exception relative aux contrats conclus avec une entité administrative ou dans le cadre d’une procédure d’une organisation internationale pourrait faciliter des processus d’approvisionnement adaptés aux ententes internationales et la participation de fournisseurs de contenu du Canada et d’ailleurs, notamment au titre de l’Accord entre l’Union européenne et le Canada concernant la participation au titre de l’Instrument SAFE.

Le projet de loi C-31 semble indiquer que des règlements pourraient venir préciser la portée de certaines exceptions et fixer des conditions réputées faire partie intégrante des contrats en défense, ce qui aiderait les fournisseurs potentiels à mieux comprendre la répartition du risque pour une catégorie donnée de contrat.

e. Utilisation accrue des outils de politique industrielle

L’élargissement des pouvoirs en matière d’aide financière (prêts, subventions, paiements anticipés, etc.) reflète la volonté du gouvernement de s’impliquer plus activement dans le développement industriel de la défense, particulièrement avec des investissements directs. Les entreprises devraient se tenir à l’affût des occasions de financement, qui viendront toutefois avec des conditions liées aux priorités de sécurité nationale.

Les prêts, subventions et paiements anticipés aideront grandement à démocratiser la participation aux projets de défense, mais des réformes sur la répartition des risques doivent encore être menées pour qu’il y ait une véritable adhésion dans l’industrie. Par exemple, la réticence habituelle du Canada d’accepter une limitation de responsabilité ou des dispositions d’indemnisation favorables aux entrepreneurs dans les contrats est depuis longtemps une caractéristique centrale de sa philosophie en approvisionnement. Conjuguée à la valeur élevée et à la complexité des projets, cette approche peut créer un risque contractuel rebutant, surtout pour les petites et moyennes entreprises.

Le gouvernement fédéral a signalé son intention de moderniser son approche quant à la répartition des risques dans l’approvisionnement en défense, mais, pour ses principales positions sur la transmission des obligations, la limitation de responsabilité et l’indemnisation, il est peu probable que cela passe par des modifications législatives. Il est à parier que l’évolution se fera plutôt au moyen des orientations stratégiques et des pratiques d’approvisionnement de l’Agence de l’investissement pour la défense.

f. Souplesse accrue pour l’accumulation de stocks

Le retrait de restrictions sur les types de stocks qui peuvent être accumulés est un signal clair que le Canada entend adopter une approche plus proactive et stratégique quant à la résilience de la chaîne d’approvisionnement, notamment pour ce qui est des considérations de sécurité économique. Ce changement devrait augmenter la demande en production intérieure et soutenir des arrangements à long terme plus prévisibles pour l’approvisionnement dans la base industrielle de défense.

Qui plus est, la proposition reflète un revirement dans la philosophie traditionnelle du Canada en approvisionnement. Le gouvernement semble repositionner l’industrie, autrefois vue principalement comme un moyen de réaliser des projets uniques, comme un partenaire stratégique dans le développement et le maintien à long terme des capacités souveraines en défense.

Cette approche correspond mieux à celles des proches alliés du Canada et démontre que l’on reconnaît qu’une meilleure intégration de l’industrie est nécessaire pour que le pays soit paré aux éventualités et à l’avant-garde des technologies. Le Canada signale aussi son intention de mieux se positionner dans un environnement défini par une concurrence accrue avec les adversaires de force égale ou quasi égale où la défense nationale dépend de plus en plus de la capacité industrielle et de la sécurité de la chaîne d’approvisionnement.

VII. Conclusion

Ensemble, les modifications proposées représentent une véritable évolution du régime d’approvisionnement en défense et de la politique industrielle du Canada. Elles ne sont pas encore en vigueur, mais elles annoncent l’adoption d’une approche plus centralisée, multifacette et axée sur la sécurité qui cadre mieux avec celles d’alliés clés. Cela créera des occasions intéressantes pour les acteurs du secteur, surtout sur les marchés alliés et pour le développement des capacités intérieures, mais accentuera aussi la complexité de la réglementation et les attentes en matière de conformité.

Les organisations ont avantage à évaluer dès maintenant les répercussions de ces changements sur leurs activités, leurs contrats et leurs stratégies de croissance. Celles qui agiront vite, qui se prépareront aux nouvelles exigences réglementaires et qui s’arrimeront aux priorités du gouvernement auront de bonnes chances de gérer agilement la transition et de saisir les nouvelles occasions.

Interdiction des acheteurs étrangers au Canada : Ce que l’échéance de 2027 laisse présager pour les investisseurs

Fri, 10 Jul 2026 00:00:00 Z

Près de quatre ans après l’adoption de la Loi sur l’interdiction d’achat d’immeubles résidentiels par des non-Canadiens (la « Loi »), laquelle doit échoir bientôt, le gouvernement fédéral examine différentes façons d’assouplir ses restrictions. Si le gouvernement Carney a maintenu la décision de l’administration précédente de prolonger l’interdiction jusqu’à la fin de 2026, il a également annoncé son intention de rouvrir le marché aux investissements étrangers dans certaines circonstances.

Points à retenir

L’interdiction pour les étrangers d’acheter une propriété résidentielle au Canada échoit en 2027, et le gouvernement Carney souhaite adopter une nouvelle approche plutôt que prolonger les mesures actuelles.
Les effets mesurables de Loi sont limités : les étrangers ne représentaient que 1,1 % des acheteurs de résidences en Colombie-Britannique en 2021, et les prix moyens de l’immobilier au Canada ont tout de même bondi de plus de 20 % pendant la période de restriction.
Le système d’exemption à paliers de l’Australie, qui permet aux étrangers d’investir dans des constructions neuves, des projets de réaménagement d’envergure et des terrains vacants, fait partie des cadres dont le Canada pourrait s’inspirer pour sa stratégie d’après 2027.
L’État prévoit déjà, en vertu de la Loi, des exonérations permanentes pour les terrains vacants et certains achats liés à des projets de réaménagement, ainsi que pour des sociétés sous contrôle étranger qui sont cotées en bourse et constituées au Canada.
Les investisseurs et les promoteurs immobiliers devraient suivre de près l’évolution de la législation à l’approche de l’échéance de 2027, notamment l’ajout de dérogations liées à l’offre qui permettraient de rouvrir certains segments du marché résidentiel aux capitaux étrangers.

Crise du logement au Canada : L’interdiction a-t-elle permis de calmer le jeu?

La Loi, qui empêche de manière générale les ressortissants étrangers et les entreprises non canadiennes d’acquérir des actifs résidentiels au Canada, fait partie des mesures mises en place pour remédier à la grave pénurie de logements que connaît le pays.

La Société canadienne d’hypothèques et de logement prévoit que les mises en chantier devront pratiquement doubler – et atteindre de 380 000 à 430 000 unités par année jusqu’en 2035 – pour répondre à la demande projetée. Le gouvernement a donc cherché à limiter le nombre d’acquéreurs étrangers, estimant qu’ils tiraient les prix vers le haut et écartaient ainsi des acteurs canadiens du marché. Cependant, les experts se demandent encore si le fait d’exclure les acheteurs internationaux peut véritablement faire augmenter l’offre de logements ou améliorer l’accessibilité.

En 2021, l’année précédant l’annonce de l’interdiction, les achats étrangers ne représentaient que 1,1 % des transactions immobilières résidentielles en Colombie-Britannique (une baisse de 3 % par rapport à 2017). Depuis, les prix moyens de l’immobilier au Canada ont malgré tout grimpé de plus de 20 %.

Peu après l’adoption de la Loi, l’État a assoupli ses restrictions afin d’autoriser les non-Canadiens à acheter des terrains vacants et des biens immobiliers résidentiels destinés à être réaménagés, reconnaissant ainsi le rôle que jouent les sociétés sous contrôle étranger dans l’élargissement de l’offre de logements et l’abordabilité.

Nouvelle approche réaliste du fédéral

Depuis son arrivée au pouvoir, l’administration Carney se montre pragmatique en matière d’investissements étrangers. Le ministre du Logement, Gregor Robertson, a indiqué que l’État voyait désormais les capitaux étrangers comme un moyen de combler les lacunes du marché immobilier canadien¹; pour sa part, le gouvernement fédéral a fait savoir qu’il envisageait une réforme fiscale pour attirer les grands investisseurs internationaux².

Le décalage entre la visée et l’effet de l’interdiction permet d’expliquer cette volte-face. La Loi vise principalement les résidences unifamiliales à vocation spéculative, plutôt que les grands multiplex ou les projets commerciaux d’envergure. Comme les étrangers ne représentent qu’une faible proportion des acheteurs des propriétés concernées, leur exclusion n’a guère contribué à remédier aux problèmes les plus criants du marché. L’évolution des prix pendant la période de restriction a été davantage influencée par les tendances macroéconomiques générales que par la mise sur pause des achats étrangers. En conséquence, on envisage de plus en plus de remplacer l’interdiction tous azimuts par des dérogations ciblées liées à l’offre qui permettraient de canaliser les capitaux étrangers vers la construction d’habitations, les réaménagements d’envergure et la réalisation de projets sur des terrains vacants.

Comparaison des cadres de restriction australien et canadien

L’Australie est confrontée à une pénurie de logements similaire à celle du Canada et prévoit construire 1,2 million de nouvelles résidences entre 2025 et 2029. Les achats de résidences existantes par des intérêts étrangers y représentaient 32,9 % du total des transactions en 2023.

Le pays a donc promulgué sa propre interdiction le 1^eravril 2025 pour limiter l’accès des étrangers au marché immobilier résidentiel. Toutefois, le cadre australien prévoit certaines exceptions, notamment :

les investissements permettant d’accroître le parc de logements de plus de 20 unités;
les acquisitions réalisées en vue d’un réaménagement qui augmentera l’offre commerciale d’habitations (villages de retraités, ressources d’hébergement, résidences universitaires, etc.);
les achats de constructions neuves;
les acquisitions de terrains vacants.

La plupart des dérogations accordées aux ressortissants étrangers en Australie sont soumises à l’approbation d’une commission d’examen et assorties de conditions strictes.

Alors que l’interdiction devait initialement prendre fin le 31 mars 2027, le gouvernement australien l’a récemment prolongée jusqu’au 30 juin 2029; on peut donc en conclure qu’il considère ces restrictions comme une réponse pérenne aux problèmes de logement, bien qu’il continue à permettre les investissements dans la construction neuve et le réaménagement.

Le ministre Robertson a affirmé que le Canada pourrait adopter un cadre semblable à celui de l’Australie après l’expiration de sa Loi en 2027, et précisé qu’il était probable que la mise en chantier de résidences et de logements locatifs haut de gamme fasse partie des exceptions en faveur des investisseurs étrangers. Quelle que soit la structure retenue, le Canada semble plus enclin à adopter une approche nuancée qu’à maintenir une interdiction élargie.

Exemptions en vigueur au Canada

Contrairement au régime australien, où toute transaction faisant l’objet d’une dérogation doit généralement être approuvée par une commission d’examen, la Loi canadienne permet que des achats autrement interdits soient réalisés par certaines catégories d’acquéreurs, sans que des autorisations au cas par cas soient octroyées.

En outre, la Loi ne s’applique qu’aux biens immobiliers situés dans des régions métropolitaines de recensement ou des agglomérations de recensement, et exclut certaines propriétés en milieu rural ainsi que des biens meubles se trouvant sur des terrains loués. Sa définition du terme « immeuble résidentiel » n’englobe généralement pas les grands bâtiments d’habitation non divisés en copropriétés ni les projets d’aménagement.

En réponse aux commentaires formulés par le secteur, le gouvernement fédéral a modifié sa Loi en 2023 pour y soustraire les terrains vacants et certains achats liés à des projets de réaménagement, de même que pour instaurer une exception pour les sociétés sous contrôle étranger qui sont cotées en bourse au Canada et constituées en vertu de la législation fédérale ou d’un régime provincial. Dans leur ensemble, ces changements visaient à faciliter l’injection de capitaux étrangers dans des projets de réaménagement susceptibles d’aider le gouvernement à atteindre ses objectifs en matière de logements.

La principale différence entre les régimes canadien et australien actuels porte sur les constructions neuves; l’Australie permet expressément l’achat de certaines d’entre elles, contrairement au Canada, qui limite ses dérogations aux terrains vacants, aux projets de réaménagement et à certaines catégories d’acquéreurs.

Éléments à surveiller à l’approche de la levée de l’interdiction en 2027

Le gouvernement n’a pas encore annoncé sa décision concernant l’avenir de la Loi. Cependant, vu les exceptions déjà admises et les récentes déclarations gouvernementales, les investisseurs étrangers doivent s’attendre à une refonte du cadre réglementaire, laquelle tiendra compte du type de bien immobilier et des visées d’un projet d’aménagement, plutôt qu’à une réouverture complète du marché. Nous continuerons de suivre de près l’évolution de la situation et mettrons cet article à jour en conséquence.

Cette publication de nature strictement générale ne constitue pas un avis juridique.

BLG peut vous aider

Par ses conseils avisés, le groupe Droit immobilier commercial de BLG aide les promoteurs immobiliers, les acheteurs, les entrepreneurs, les consultants, les autorités publiques et les autres acteurs du secteur à surmonter les écueils les plus complexes entourant la construction de logements. Pour toute question sur cet article ou sur un projet de construction auquel vous prévoyez participer, communiquez avec les personnes-ressources ci-dessous.

FSRA’s new Operational Risk and Resilience Guidance for Ontario insurers

Thu, 09 Jul 2026 00:00:00 Z

On June 8, 2026, the Financial Services Regulatory Authority of Ontario (FSRA) issued its Operational Risk and Resilience Guidance (PC0050APP) for Ontario-incorporated insurance companies and reciprocal insurance exchanges (collectively, Ontario insurers).

The guidance, which sits under FSRA’s Risk-Based Supervisory Framework (RBSF-I), marks an escalation in supervisory focus on cyber threats, data vulnerabilities, third-party dependencies, and climate exposure.

While adoption of the guidance’s principles is not mandatory, FSRA has indicated that an insurer’s adoption of those principles when determining its supervisory approach may be weighed. Ontario insurers should thus treat this guidance as a strong signal of regulatory expectations and an early prompt to assess gaps.

What Ontario insurers should do now

Ontario insurers should consider a structured gap assessment against PC0050APP’s four principles, prioritizing:

Reviewing Board and Senior Management governance structures, including risk appetite documentation and ORMF approval records;
Auditing IT and cybersecurity controls against GR0016INT and confirming incident notification procedures align with FSRA’s materiality thresholds;
Reviewing third-party vendor contracts for notification obligations, audit rights, and BCP/DRP integration;
Testing BCP and DRP adequacy, including scenario-specific stress testing; and
Beginning to incorporate ESG and climate risk considerations into corporate strategy ahead of anticipated further FSRA guidance.

Background

FSRA supervises both Ontario-incorporated insurers and reciprocal exchanges licensed under the Insurance Act (Ontario); PC0050APP supplements the existing Corporate Governance Guidance (PC0051INT) and FSRA’s IT Risk Management Guidance (GR0016INT). However, while GR0016INT applies to all FSRA-regulated entities, including federally incorporated insurers licensed in Ontario, PC0050APP applies to Ontario-incorporated insurers only.

Insurers subject to federal oversight should also note that FSRA’s guidance broadly aligns, but remains separate as provincial guidance, with expectations in force for federally regulated financial institutions under OSFI’s Guideline B-13 – Technology and Cyber Risk Management, reinforcing that operational and cyber resilience is now a pan-Canadian regulatory priority. Ultimately, both FSRA and OSFI have increased their supervisory focus on operational and cyber resilience, resulting in enhanced oversight expectations for insurers operating in Ontario.

PC0050APP’s four principles

PC0050APP is organized around four principles that outline FSRA's intended supervisory outcomes:

(1) Governance

Ultimate accountability for operational risk oversight rests with the Board and Senior Management. FSRA expects Ontario insurers to maintain an Operational Risk Management Framework (ORMF), adopt a three-lines-of-defence structure, and clearly define risk appetite, tolerance, and limits. The Board must periodically review and approve Business Continuity Plans (BCPs) and Disaster Recovery Plans (DRPs).

(2) Risk identification and assessment

Ontario insurers must regularly scan their operating environment, including products, people, processes, systems, and the external environment, to identify and assess inherent operational risks. Information technology is specifically flagged as a significant activity subject to this scan.

(3) Risk management

An effective ORMF should reduce both the frequency and impact of operational risk events. Frameworks and supporting policies must be commensurate with the Ontario insurer’s size, complexity, and risk profile, and integrated with enterprise-wide risk management.

(4) Resilience

Ontario insurers must plan for adverse scenarios and demonstrate crisis readiness. BCPs and DRPs must be tested against severe but plausible scenarios, kept current, and produced for FSRA on request during supervision. The guidance also emphasizes learning from past failures as a driver of continuous improvement.

Four sub-risk categories under the lens

FSRA identifies four sub-risks within its definition of operational risk, each with specific supervisory implications:

(1) Third-party risk

As insurers increasingly rely on cloud service providers and other outsourced vendors, FSRA emphasizes that accountability and ownership of all risks remain with the insurer, regardless of the outsourcing arrangements. Ontario insurers should establish a third-party risk management framework, conduct ongoing due diligence, and ensure contracts contain appropriate notification, audits, and performance provisions. Concentration risk (that is, over-reliance on a single dominant provider) warrants specific attention.

(2) Cyber risk

FSRA will assess IT controls across access management, network security, asset classification and disposal, incident monitoring, and cybersecurity awareness training. Insurers must provide FSRA with timely notification of material IT incidents as required under GR0016INT, which sets a 72-hour notification window for Ontario-incorporated insurers and reciprocals. BCPs and DRPs should specifically address technology service disruptions.

(3) Data risk

Inadequate data governance is a distinct operational risk, spanning integrity, availability, and the safeguarding of confidential consumer information. FSRA will evaluate whether clear accountability and governance frameworks are in place, and whether data capabilities hold up under stress.

(4) Climate risk (physical and transition)

Physical climate events can disrupt critical operations and amplify underwriting losses through increased property damage claims. FSRA currently assesses ESG and climate initiatives as part of the Resilience Rating under RBSF-I, and has signalled that further climate-specific guidance may follow.

The broader regulatory and legal landscape

FSRA’s PC0050APP emerges amid a broader wave of cybersecurity and operational resilience regulation at both federal and provincial levels.

At the federal level, Bill C-8 received Royal Assent on June 15, 2026, thereby completing the legislative process for the Critical Cyber Systems Protection Act (CCSPA) and establishing Canada's first mandatory cybersecurity regime for designated operators in sectors, including telecommunications, banking, and clearing systems. Its provisions will come into force gradually, on a day or days to be fixed by order of the Governor-in-Council; read BLG’s in-depth Insight on the topic, Critical Cyber Systems Protection Act: Bill C-8 is adopted.

While in its current form the CCSPA does not capture federally regulated insurers, insurers that rely on vendors that are designated operators, such as large bank-affiliated cloud providers, may face downstream contractual cybersecurity requirements as those vendors implement their own CCSPA obligations.

Provincially, Ontario's Enhancing Digital Security and Trust Act, 2024 (EDSTA) and its accompanying regulations, O. Reg. 51/26 (Cyber Security) and O. Reg. 52/26 (Digital Technology Affecting Individuals Under Age 18), both in force as of July 1, 2026, impose mandatory cybersecurity programs, biennial cyber maturity assessments, and 72-hour critical incident reporting on prescribed broader public sector entities.

Ontario's Plan to Protect Ontario Act (Budget Measures), 2026 (Bill 97) further modernizes the province's access-to-information and privacy framework by extending privacy impact assessment, breach reporting, and cybersecurity safeguard requirements to municipalities.

Although private insurers are not captured by EDSTA, its regulations, or Bill 97, insurers serving public-sector clients may encounter more rigorous cybersecurity expectations as those organizations strengthen vendor oversight obligations.

Takeaways for Ontario insurers

Together with OSFI Guideline B-13 (Technology and Cyber Risk Management), OSFI Guideline B-10 (Third-Party Risk Management), and FSRA's GR0016INT (IT Risk Management Guidance), PC0050APP reinforces a consistent regulatory expectation: boards are accountable for operational risk, risk management frameworks must be documented and proportionate, third-party accountability cannot be outsourced, and resilience must be demonstrated through tested plans rather than asserted. For Ontario-incorporated insurers, PC0050APP provides the framework through which FSRA will assess operational risk and resilience during supervisory reviews.

Key takeaways include:

(1) Governance accountability cannot be delegated.

The Board bears ultimate responsibility.
Risk appetite statements, ORMF approval, and BCP/DRP oversight must be demonstrably Board-level activities.
Ontario insurers should assess their governance structures against Principle 1 and document any gaps.

(2) Cyber and IT controls will face direct scrutiny from FSRA.

FSRA will assess the full lifecycle of IT risk management from access controls and network security through to incident reporting and staff training.
Insurers should benchmark their programs against GR0016INT. The 72-hour material incident notification window for Ontario insurers under GR0016INT is a compliance tripwire worth confirming in internal procedures.

(3) Outsourcing does not outsource the risk.

Accountability for third-party risks stays with the insurer.
Vendor contracts, particularly with cloud service providers, should be reviewed for incident notification obligations, audit rights, concentration risk provisions, and BCP/DRP integration.

(4) BCPs and DRPs must be tested and producible on demand.

FSRA may require insurers to present BCPs, DRPS, and scenario testing results during supervisory monitoring.
Plans must be current, scenario-tested, and capable of being produced promptly.

(5) Climate is a growing supervisory priority, and should be acted upon before the next guidance is anticipated to come out (2031).

FSRA has signalled that additional climate and ESG guidance is coming, and already factors ESG initiatives into the Resilience Rating.
Ontario insurers that have not yet begun embedding climate risk into corporate strategy should start now.

Just over the horizon: 2025 annual report of the OSC’s Investor Advisory Panel

Wed, 08 Jul 2026 00:00:00 Z

The Ontario Securities Commission’s Investor Advisory Panel released its 2025 Annual Report (IAP Report) in May, suggesting that investor protection should continue to shape the regulatory agenda, including through regulatory initiatives aimed at innovation, capital formation and competitiveness. The IAP Report emphasizes that retail investors are operating in an increasingly complex environment marked by more product choice, technological change, social media influence and increased fraud risk, and it repeatedly frames investor protection as essential to each branch of the OSC’s mandate.

For registrants, one important theme is the focus on retail facing digital practices. The IAP highlights concerns about do-it-yourself (DIY) investing, the growing use of AI and social media in investment decision making and digital engagement practices such as push notifications, contests, rewards programs and trending asset lists. It supports additional safeguards, cautions against harmful digital engagement practices and encourages regulators to consider whether further measures are needed in relation to finfluencers.

The IAP Report also notes the expansion of Exchange-Traded Funds (ETFs), with 2025 marking the first time ETF launches outpaced mutual fund launches, including more complex and digital asset related products, and stresses that disclosure regarding such products must be clear, accessible and useful to investors. The IAP Report also raises concerns more generally about inconsistent compliance with the Client Focused Reforms (CFRs), including deficiencies in risk profiling, “Know Your Product (KYP)” processes, suitability assessments and training.

Finally, the IAP Report underscores two broader developments relevant to firms’ risk management frameworks: modernized enforcement actions and renewed attention to investor redress. The IAP calls for expanded enforcement tools and strategies in response to increasingly sophisticated fraud, including AI-enabled scams, and reiterates its long-standing support for binding decision-making authority for the Ombudsman for Banking Services and Investments (OBSI), along with clearer and more effective redress mechanisms for harmed investors.

The authors would like to thank Ray Zhao, student-at-law, for his contributions to this insight.

Le modèle d’accès aux documents d’information continue des Autorités canadiennes en valeurs mobilières est prêt

Wed, 08 Jul 2026 00:00:00 Z

Les Autorités canadiennes en valeurs mobilières (ACVM) ont mis la touche finale à leur nouveau modèle d’accès visant certains documents d’information continue des émetteurs assujettis qui ne sont pas des fonds d’investissement (le « modèle d’accès ») en modifiant le Règlement 51-102 sur les obligations d’information continue et le Règlement 54-101 sur la communication avec les propriétaires véritables des titres d’un émetteur assujetti.

Si toutes les approbations nécessaires sont obtenues, les modifications entreront en vigueur le 22 septembre 2026 et confirmeront la tendance vers les communications numériques sur les marchés financiers canadiens.

Points à retenir

Un nouveau modèle d’accès électronique pour la transmission par des émetteurs assujettis n’étant pas des fonds d’investissement des états financiers annuels, des rapports financiers intermédiaires et des rapports de gestion correspondants (collectivement, les « documents d’information continue ») entrera en vigueur le 22 septembre 2026.
Le modèle d’accès est facultatif et peut être utilisé pour transmettre certains documents d’information continue même si les obligations de transmission existantes continuent de s’appliquer pour d’autres – il offre donc de la flexibilité aux émetteurs.
Les émetteurs assujettis qui adoptent le modèle d’accès doivent suivre un cadre de notification, qui comprend l’obligation de transmettre un avis avant de commencer à l’utiliser, de publier un communiqué et de faire une annonce en ligne, et respecter les obligations d’information continue pour s’assurer que les investisseurs sachent en tout temps comment consulter les documents d’information continue électroniquement.
Les investisseurs pourront toujours demander et obtenir des exemplaires sans frais. Les instructions permanentes visant la réception de documents sous forme électronique ou papier continueront d’être appliquées.
Le modèle d’accès fonctionne en parallèle des procédures de notification et d’accès; il ne les remplace pas.

Contexte : les origines du modèle d’accès

Selon la législation actuelle en valeurs mobilières au Canada, les émetteurs assujettis doivent chaque année donner aux investisseurs l’occasion de demander certains documents d’information continue en format électronique ou papier.

En 2022, les ACVM ont proposé un modèle fondé sur l’accès pour les prospectus et les documents d’information continue. Il est entré en vigueur pour les prospectus en 2024, mais les ACVM ont retardé sa mise en œuvre pour les documents d’information continue à la lumière de commentaires réclamant plus de protections pour les investisseurs.

Des modifications concernant la sensibilisation des investisseurs et l’accessibilité ont été publiées pour commentaires en 2024. Pendant la deuxième période de consultation, les commentaires donnaient unanimement un appui général aux modifications proposées et se réjouissaient de l’équilibre entre l’allégement du fardeau réglementaire et l’accès continu des investisseurs à l’information.

Fonctionnement du modèle d’accès : obligations de dépôt, de notification et de communication

Selon le modèle d’accès, un accès électronique est réputé avoir été donné lorsque l’émetteur satisfait aux exigences suivantes :

Il a déposé le document d’information continue sur SEDAR+.
Au plus tard un jour civil après ce dépôt, il a publié un communiqué pour annoncer qu’il est accessible en ligne. Le communiqué doit indiquer comment accéder au document sur SEDAR+ et comment les investisseurs peuvent en demander un exemplaire, et confirmer que toute instruction permanente de transmission électronique ou papier continuera d’être appliquée. Il doit aussi informer les investisseurs de la fonctionnalité de notification de SEDAR+, laquelle leur permet de s’abonner pour recevoir des notifications par courriel lorsque l’émetteur dépose des documents d’information continue visés sur SEDAR+. Les mentions exigées peuvent être présentées dans un communiqué contenant d’autres informations.
Il a publié le document d’information continue sur son site Web ou a fourni un hyperlien y menant directement sur SEDAR+ au plus tard deux jours civils après son dépôt. L’émetteur doit aussi inclure une déclaration prescrite sur l’accès électronique sur son site Web. Des instructions générales précisent que les documents publiés doivent rester accessibles au moins jusqu’à la publication des documents du prochain exercice, et que la déclaration devant obligatoirement figurer sur le site Web doit être sur la même page, près des documents ou du lien vers SEDAR+.

L’émetteur assujetti qui utilise le modèle d’accès pour la première fois doit publier un communiqué au moins 25 jours civils avant de faire un dépôt et de publier un communiqué expliquant qu’il s’est servi du modèle d’accès.

En plus de réaliser les étapes liées au dépôt, les émetteurs qui se prévalent du modèle d’accès doivent donner de l’information continue aux investisseurs sur le modèle et son fonctionnement. Ils doivent notamment fournir un « rappel annuel » dans les documents reliés aux procurations, un jeu de documents relatif aux procédures de notification et d’accès ou un document d’accompagnement distinct expliquant que les documents d’information continue seront rendus accessibles électroniquement, comment s’abonner aux notifications SEDAR+ et comment demander des exemplaires.

Aucun avis n’est requis de la part de l’émetteur qui cesse d’utiliser le modèle d’accès. Le rappel annuel peut figurer dans les documents de notification et d’accès, mais les modifications ne changent par ailleurs rien à ce régime.

Considérations pratiques pour les émetteurs

Le modèle d’accès est un pas important vers un régime de communication principalement numérique, mais, comme il est facultatif, les émetteurs doivent analyser si son adoption leur convient.

Pour nombre d’entre eux, le modèle d’accès pourrait permettre de réduire les coûts et le fardeau administratif associés aux exigences traditionnelles de transmission, comme l’impression et l’envoi postal des documents d’information continue. Si les dépenses liées à la transmission peuvent diminuer, les émetteurs pourraient devoir assumer de nouveaux coûts de conformité associés à la mise en œuvre et au maintien du modèle d’accès. L’adoption du modèle vient aussi avec de nouvelles exigences opérationnelles, comme le dépôt en temps utile des documents et communiqués connexes sur SEDAR+, la publication dans les délais prescrits des déclarations sur le site Web et d’autres tâches liées aux obligations d’information continue.

Le modèle d’accès reflète l’appétit des investisseurs pour les communications électroniques, mais les émetteurs doivent tout de même réfléchir à la façon dont ils réagiront à un changement dans les pratiques de transmission. Les investisseurs particuliers qui comptent sur les méthodes de transmissions traditionnelles ou qui n’utilisent pas vraiment SEDAR+ pourraient avoir besoin d’un accompagnement plus soutenu. Il pourrait être utile de bonifier les communications obligatoires aux investisseurs (par exemple en facilitant la navigation du site Web, en donnant des liens directs ou en envoyant des rappels par courriel) pour contrecarrer toute réduction dans la visibilité des documents.

Le modèle d’accès peut être adopté pour les états financiers annuels et les rapports de gestion connexes ou pour les rapports financiers intermédiaires et les rapports de gestion connexes, ou pour les deux. Les émetteurs peuvent aussi choisir d’utiliser le modèle pour certaines périodes intermédiaires et continuer de se plier aux exigences traditionnelles pour d’autres. Pour l’heure, le modèle ne s’applique pas aux documents liés aux procurations ni aux circulaires d’offre publique d’achat ou de rachat, et les émetteurs étrangers visés ou inscrits auprès de la SEC ne peuvent pas s’en prévaloir.

Enfin, les émetteurs doivent se garder de penser que le modèle d’accès remplace toutes les obligations de transmission. Les instructions permanentes données en vertu du Règlement 54-101 continuent de s’appliquer; le recours au modèle ne les remplace pas. Les investisseurs peuvent encore demander et recevoir des exemplaires sans frais, et toute instruction permanente visant la réception de documents sous forme électronique ou papier doit continuer d’être appliquée. De plus, les émetteurs pourraient continuer d’être soumis à des exigences de transmission distinctes prévues par la législation sur les sociétés par actions ou d’autres régimes applicables.

Prochaines étapes

Ces modifications témoignent de la volonté des ACVM de moderniser la transmission d’information sur les marchés financiers canadiens sans compromettre l’accès à cette information pour les investisseurs.

Les émetteurs qui songent à adopter le modèle d’accès doivent analyser les nouvelles exigences en matière d’échéances, de publication Web et de communication aux investisseurs, et vérifier si leur site et leurs contrôles actuels permettent de respecter les échéances et si d’autres lois sur les sociétés par actions ou obligations de transmission continuent de s’appliquer.

Pour en savoir plus, consultez l’Avis de publication des ACVM, Modifications visant la mise en œuvre d’un modèle d’accès à certains documents d’information continue des émetteurs assujettis qui ne sont pas des fonds d’investissement.

Les auteurs aimeraient remercier Sarah Spector, étudiante d’été, pour sa contribution à la rédaction de cet article.

A view from the scenic route: The 2025 OTC derivatives report

Wed, 08 Jul 2026 00:00:00 Z

The Ontario Securities Commission (OSC) released the Canadian OTC Derivatives 2025 Annual Report in May (the Report). The OSC obtains its data from public sources and directly from trade repositories. The Report offers findings of interest regarding Canada’s OTC markets for investment managers and advisers. Interest rate derivatives remained the dominant asset class in Canada’s OTC market, accounting for 88.2 per cent of total gross notional outstanding (GNO) in Q4 2025, with growth driven by swaps and continued adoption of the Canadian Overnight Repo Rate Average (CORRA-CAD) and Secured Overnight interest Rate (SOFR-USD) based products. Canada had 9.2 per cent of the global OTC derivatives market (measured by GNO) in June 2025.

The report also underscores the OSC’s increasing focus on data quality. Amendments to the trade reporting rule that took effect on July 25, 2025, together with compliance related remediation, materially affected reported statistics by improving product classification and removing stale or expired trades.

Looking ahead, the most notable regulatory development is the expansion of mandatory central clearing under NI 94-101 – Mandatory Central Counterparty Clearing of Derivatives and Related Companion Policy, effective March 25, 2026, to cover certain index credit default swap products in addition to updated interest rate derivatives tied to benchmark transition. More broadly, the report suggests the OSC is taking a more granular, risk-sensitive approach to monitoring derivatives markets, including through the use of risk metrics like DV01, which measures the dollar change in a position’s value resulting from a one-basis-point movement in interest rates.

The authors would like to thank Ray Zhao, student-at-law, for his contributions to this insight.