Customers of face mask company connected to Kevin Vuong could get tax refund

TORONTO -

Customers who bought some of the more than one million COVID-19 face masks sold by a company connected to Toronto's independent MP Kevin Vuong may have paid too much sales tax, and could be entitled to a refund, according to experts contacted by CTV News Toronto.

The company, Take Care Supply, sold its face masks and charged GST or HST after the government made such products ‘zero-rated’ — essentially sales tax-free — so now those customers can ask for a refund from the company or the federal government itself, they said.

"As a business owner, you shouldn’t be charging that tax if it’s zero-rated," said Sanjeev Desai, a Chartered Professional Accountant in the GTA.

Another CPA, Tiffany Stewart, told CTV News Toronto that her advice to the company would be: "Stop doing it right away. Fix what's happening so the next person is not subjected to that HST or GST charge."

The company, Take Care Supply, sells cloth face masks made in Toronto for $15 each. Court records suggest the business started with the pandemic, demand for their products exploded, and the company had $7.5 million in revenue in 2020.

The company is a venture between businessman Larry Lau, designer Anna Marie Mountfort, and Kevin Vuong, who went on to become the MP for Spadina Fort York.

That was after Vuong had been dropped from the Liberal party amid revelations he’d been charged with sexual assault, a charge that was later withdrawn. Mountfort is now suing the other two, alleging she was unfairly cut out of the business. 

In November 2020, the federal government made many masks “zero-rated” — which makes their sales tax zero. Receipts examined by CTV News show the company charged $1.95 on a mask sold in Ontario where the province has HST, and 5 per cent GST in provinces that don’t have the tax-sharing agreement with the federal government.

Take Care Supply said in an email its operations are in compliance with the CRA and it will continue to collect the tax. 

It told CTV News Toronto in a statement that it reviewed criteria set by the CRA and “decided out of an abundance of caution to follow the practice of industry leaders… all tax collected are remitted to the Canada Revenue Agency. As such, per the Government of Canada, Canadians can file a rebate claim with the CRA if the amount exceeds $2.”

It pointed to other companies that also collect the tax. Many retailers examined by CTV News don’t charge the tax, though some do. Experts said the refund could apply to customers of any company.

It’s not clear how much sales tax consumers were charged in 2021 by Take Care Supply. 

The government of Canada has a process where customers can apply for a refund if it’s more than $2. The HST on one $15 mask is $1.95 — just under the threshold — so it’s up to the retailer whether to refund the money directly.

University of Toronto political science professor Nelson Wiseman says Vuong has to be more careful than most because he’s now a public figure.

“He’s a public personality, so now other aspects of his life can get light shone on them,” Wiseman said.

Meanwhile, a petition demanding that Vuong resign now has more than 5,000 signatures, and other Toronto-area political figures have called for his resignation, including Ontario Liberal leader Steven Del Duca and Ontario NDP MPP Suze Morrison.

Vuong is legally entitled to his seat, Wiseman said, but he said it’s uncertain he has the support of his riding given that many early voters had cast a ballot before he was ejected by the Liberal party. 

“The honourable thing for him to do would be to resign, and run in a by-election as an independent,” Wiseman said.

The government of Canada announced in November 2020 that, non-medical face masks could qualify for zero-rating if they are designed for human use, they are made of multiple layers of dense material, they are large enough to completely cover the nose, mouth and chin without gaping, they have ear loops, ties or straps for securing the face mask or respirator to the head, they are for use in preventing the transmission of infectious agents such as respiratory viruses, and they do not have an exhalation valve or vent.

“If a customer was charged GST/HST on these products after December 6, 2020, they have two options for recovering the GST/HST they paid,” said a statement from CRA. “They can either go to the supplier to get a refund or credit of the amount, [or] file a rebate claim with the Canada Revenue Agency if the amount exceeds $2.”