October 15, 2020
Express Gold Refining Ltd., a Toronto, Ontario-based company in the gold refining business, obtained protection under the CCAA on October 15. This CCAA proceeding is not intended to be an operational restructuring. Rather, CCAA relief is required because of certain GST/HST commodity tax disputes, including CRA reassessments issued to the company which are in excess of $189.0 million, as well as CRA's refusal to pay the company's input tax credits ("ITC") since August 2018. CRA's diligence in approving and paying the company's claims for large amounts of ITCs is integral to the company's business. In November 2018, CRA expanded an ongoing audit to cover a 29-month period and announced that it would not only withhold any August 2018 ITCs, but also any future ITCs until the completion of the audit. It is unclear whether there are legal grounds to withhold payment of such off-audit ITCs. In May 2020, CRA issued a proposal stating its intention to reassess the company for the 29-month period, as it believed the company was engaged in a type of tax refund fraud called a "carousel scheme". Although the reassessments are currently being challenged in the Tax Court of Canada, they are still enforceable and the company cannot pay the $189 million penalty. Deloitte was appointed monitor. GSNH is general counsel and Baker & McKenzie is tax counsel for the company. Dentons is counsel to the monitor.