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GST/HST for digital economy businesses

New rules for digital economy businesses are in effect as of July 1, 2021.

Administration and compliance approach

The Government of Canada announced in the April 19, 2021 Federal Budget that the Canada Revenue Agency (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 takes a practical approach to compliance and exercises discretion in administering these measures during a 12-month transition period, starting July 1, 2021.

Before the CRA exercises its discretion in the administration of the new measures, an affected business or platform operator must first obtain the CRA’s written approval that such discretion will be exercised.

To receive a timely response from the CRA regarding the exercise of its discretion, a submission from an affected business or platform operator should provide as much information as possible to demonstrate why it is unable to meet, for operational reasons, its new GST/HST obligations despite taking reasonable measures to try to be compliant. Submissions should therefore briefly describe:

  • the activities of the affected business or operator, along with estimated annual sales figures in Canada and the GST/HST normally collected,
  • the issues encountered by the affected business or operator,
  • the steps to be taken to resolve those issues and their anticipated completion dates, and
  • any extenuating circumstances that may prevent the business or operator from being compliant with the new GST/HST measures before a specified date.

Note that because this is not intended to be an exhaustive list, the CRA may contact the affected business or operator if additional information is required in respect of their submission.

A submission should also indicate how long the affected business or platform operator needs the CRA to exercise its discretion by providing a specific end date that does not extend beyond June 30, 2022.

Submissions may be made to the CRA during the 12-month transition period beginning on July 1, 2021. Please contact us for further information and assistance .

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