Stumpage fee declared invalid tax

Date Closed

January 21, 2008

Lead Office

Toronto

On January 21, 2008, Justice Gary Tranmer released a trial decision declaring that a component of stumpage fees, the residual value charge, levied by the Ontario government on the harvest of Crown hardwood is not a price or a fee, but in pith and substance a tax. Boniferro Mill Works ULC, a hardwood lumber mill in Sault Ste. Marie, challenged the charge claiming that it was a tax for which no authority existed in the statute, the Crown Forest Sustainability Act, 1994 (“CFSA”), and consequently was invalid. Justice Tranmer agreed and further held that Boniferro Mill Works ULC is entitled to an accounting and to reimbursement for all payments of the residual value charge made to the Ontario government since it acquired the mill in March 2003, plus interest.

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