The Canada Revenue Agency (CRA) advises as of July 1, 2021, digital economy businesses, including digital platform operators, may have potential goods and services tax/harmonized sales tax (GST/HST) obligations under three proposed measures that were announced in the Fall Economic Statement 2020 by the Government of Canada and revised as announced on April 19 2021 following consultations with stakeholders. This means you may have new obligations, including registering, and charging and collecting the GST/HST.
The government expects that affected businesses and platform operators will comply with their obligations to register, collect and remit the GST/HST as set out under the new rules and legislative provisions to ensure that the GST/HST applies effectively and fairly to e-commerce transactions.
On April 19, 2021, the Government of Canada announced in the Federal Budget that the CRA will work closely with businesses and platform operators to assist them in meeting their obligations.
Where the affected businesses and platform operators show that they have taken reasonable measures but are unable to meet their new obligations for operational reasons, the CRA will take a practical approach to compliance and exercise discretion in administering these measures during a 12-month transition period, starting July 1, 2021.
Definition of a Digital platform and Distribution platform operator
Digital platformincludes a website, an electronic portal, gateway, store or distribution platform or any other similar electronic interface but does not include:
- an electronic interface that solely processes payments
- a prescribed platform or interface (no platform or interface is currently prescribed)
Distribution platform operator, in respect of a supply of property or a service made through a specified distribution platform, means a person (other than the supplier or an excluded operator in respect of the supply) that
- controls or sets the essential elements of the transaction between the supplier and the recipient
- if the above does not apply to any person, is involved, directly or through arrangements with third parties, in collecting, receiving or charging the consideration for the supply and transmitting all or part of the consideration to the supplier;
- is a prescribed person (no person is currently prescribed).
Depending on the type of business in which you are involved you may also be affected by more than one of the measures and will need to consider their combined impact on your business. Even if you are not required to register and charge and collect GST/HST, your customers may have to begin paying GST/HST to a digital platform operator on your supplies if they are facilitated through a digital platform.
Types of businesses affected by each measure:
Cross-border digital products and services
These are non-resident vendors who sell taxable digital products and services, such as online music streaming or traditional services, to Canadian consumers and Canadian entities who are not registered under the normal GST/HST regime. This also includes distribution platform operators who make or facilitate such supplies through their platform. A simplified GST/HST registration, reporting and remittance system will be available to non-resident vendors and non-resident distribution platform operators under this proposed measure.
Sale of goods located in Canada
These are non-resident vendors who make taxable sales of goods that are delivered or made available to the purchaser in Canada, including goods that are located in Canada, such as in a fulfillment warehouse or shipped from a place in Canada to a purchaser in Canada. This also includes distribution platform operators who sell or facilitate the sale of such goods through their platform.
Platform-based short-term accommodation
These are suppliers of taxable short-term accommodation in Canada that are facilitated through an accommodation platform by an accommodation platform operator. This also includes accommodation platform operators who facilitate such supplies through their platform. A simplified GST/HST registration, reporting and remittance system will be available to non-resident accommodation platform operators under this proposed measure.
More information
Overview on the GST/HST for digital economy businesses
Learn more on GST/HST for businesses
How place of supply affects GST/HST rates
Contact Canada Revenue Agency (CRA)