It’s not what you owe, it’s who you owe;
The Trudeau government let more than $67 million in GST go uncollected from a start-up airlines over the past several years.
Now the red-faced government is looking to sweep the matter under the rug, claiming privacy concerns.
In November, the Federal Court in Ottawa ordered all “real properties and immovables” of Flair Airlines be seized and sold to recoup $67,174,123 in back taxes. When the story broke in January, the company tried to dismiss concerns about the payments as relating to import duties, except airplanes aren’t subject to import duties.
There is however a requirement to pay 5% GST at time of import, something Flair appears not to have done as they brought 20 Boeing 737 MAX aircraft over the past several years. The amount owed by Flair matches the GST due on the aircraft but neither the government nor Flair is willing to say much.
On Feb. 20, that writ of seizure was quietly rescinded after the government and Flair came to an agreement on paying back the money. The agreement comes after months of high-powered lobbying of several ministries and the prime minister’s office by Liberal insiders.
Is Flair so badly run that it doesn’t know to create a shell company in a location that doesn’t have a GST, and then lease the planes to itself, like every other airline in the world?
underrated comment
JD, many years ago I was Canadian national manager for a U S company. In the late 60’s and 70’s the company was owned by two brothers. One brother ran the day to day operation the other brother had a car lease operation. The lease company bought cars needed by the other company, the leases were deductible, the purchase of the cars was deductible, well, the benefit was very good from a cost and tax circumstance.
Most likely because the principals and/or management are going to rape the corpse for all it’s worth down to toilet paper, light bulbs and paper clips.
Why would anyone willingly pay GST or any other tax while not having representation? If Flair doesn’t have to pay, why would my company have to pay?
We’ve come to see that we work on tax farms, for other’s enjoyment, and for that we’re punished further by seeing in the media that we’re intolerant.
When’s the separation referendum? Oh I know the Conservatives will win the next federal election, probably the one after that too, but by 2034 the #Libranos will return, and they’ll have revenge on their minds.
Best to have a plan, and work on it until then… in 2034, the minister of environment Guilbeault will be 63 years old and be seen as an elder statesman of the #Librano Party…. lol
*Is the unionised RCMP going to investigate this? Perhaps they only investigate those who disagree with the current #Libranos gov’t of Canada. I understand the unionised RCMP hasn’t been delivering top tier work lately. Any word on the plight of those two foreigners removed from the Winnipeg level 4 lab?
The truth is that no net GST is paid on business imports. You are billed on import and claim back on filing the next GST return. For huge imports worth tens of millions there should be a system of direct offset.
I suspect what happened is that they were billed GST and didn’t pay it and then claimed back the GST they didn’t pay. The GST paid on imports is billed through an import specific account and the claim back of the GST is through the regular GST account.
The CRA using court ordered seizures to push negotiations is common. There is rarely an actual seizure. It is done to wake up delinquent taxpayers and place them first in line in a dissolution. There is a massive public interest in facilitating airline competition in Canada.
I think you are exactly right, there’s a few details missing in the report. It really goes to show how bad the GST system is.
If their bank wouldn’t finance the tax payable on import, then they didn’t file the import documents when they landed.
The law doesn’t allow release until the duties (includes import GST) are guaranteed or paid cash. In that case, any aircraft used domestically are essentially smuggled. CBSA should have seized them. Someone dropped the ball here.
If you have an account with CRA for import charges I’m pretty sure nothing is held up. General Motors doesn’t write ten thousand cheques per month for import duties and GST. They write one. I’ve never done it myself but all my clients that import have a CRA account for import charges.
Increase the public servants by 40% in 8 years and decrease the public service by 150% in 8 years.
Maybe we should call it the Entropy Service – pretty much the country in a nutshell.
Not sure all the fact are straight in this story. As a farmer, I don’t pay GST on most farm machinery like large tractors or combines. Some smaller stuff you do but if it is used for producing farm revenue, you can get a GST refund. I am sure that airplanes to an airline is treated the same way. Flair just needs to move its home base to quebec and all tax problems are solved.
Farm machinery is a rare exception.
Yes, like most stories about business it’s short on details. Any business that makes an investment in their property, plant or machinery that improves their business is entitled to a full refund of any GST they may have paid. The refunds are called ITC (investment tax credits)
This is why our tax system is so abhorrent. Someone earning $100k/year pays 3x as much tax as someone earning $60k/year. But a bunch of rich Liberal insiders get to skip out on a $67M tax bill because they are cozy cozy with the current government.
They won’t get out of any tax. The government has first dibs and it’s an asset rich company. It’s called payment negotiation. Endless taxpayers of all incomes are involved in the same process. No public interest is served by bankrupting a company in a market lacking competition.
You implying “Public Interest” plays any part of Government decisions?
Bankrupting a company in a market lacking competition is the Business Plan of our Parasitic Overload.
Sun TV,endless Airlines, the genius of Government subsidized businesses funded by UI..All contradict any suggestion “Public Interest” plays any part in Political Games.
The endless and relentless attacks on oil,gas and coal being another example.
Perverse incentives..
“We tax behaviour we wish to discourage”
Which is why we have had “Income Tax” since 1917..A temporary tax,to pay for the war…War to end all wars..Heh.
Hell the only “Public Interest” our dear leaders know,is the interest on the debt they have created..
Which the “Public” gets to pay.