GST/HST for digital-economy businesses: Overview
The Canada Revenue Agency (CRA) is responsible for administering the Excise Tax Act (ETA), which governs the application of the GST/HST. The ETA generally requires every registrant making a taxable supply in Canada to collect the GST/HST from the recipient and remit it to the CRA. The ETA has been amended, effective July 1, 2021, to include GST/HST provisions that generally apply to non-resident suppliers, distribution platform operators and accommodation platform operators participating in the digital economy. This means digital-economy businesses may have new obligations, including registering for a GST/HST account and charging and collecting the GST/HST.
Administration and compliance approach
The government expects that affected businesses and platform operators to comply with their obligations to register for a GST/HST account and collect and remit the GST/HST as set out under the related rules and legislative provisions to ensure that the GST/HST applies effectively and fairly to these e-commerce transactions.
The CRA is taking measures to help businesses and platform operators meet these new GST/HST obligations by using a prospective approach to compliance except for egregious cases of non compliance.
Learn more: Notification and information reporting – GST/HST for digital-economy businesses
Type of supplies affected
Depending on the type of supplies made by your business, you may be affected by more than one of the measures and need to consider their combined impact on your business. Even if you are not required to register for a GST/HST account and charge and collect the GST/HST, your customers may have to begin paying the GST/HST to a distribution platform operator or accommodation platform operator on your supplies if they are facilitated through a digital platform.
Cross-border digital products and services
Non-resident vendors or non-resident digital platform operators (acting as direct vendors) who sell these taxable digital products or services, such as online music streaming or traditional services, to Canadian consumers and Canadian entities who are not registered under the normal GST/HST registration regime, may be affected by these digital-economy measures. This also includes distribution platform operators who facilitate such supplies through a platform. A simplified GST/HST registration, reporting and remittance regime is applicable to these non-resident vendors, non-resident digital platform operators and distribution platform operators.
Supply of qualifying goods in Canada
Non-resident vendors or non-resident digital platform operators (acting as direct vendors) who supply qualifying goods (also known as a “qualifying tangible personal property supply”), including goods that are delivered or made available in Canada, such as goods located in a fulfillment warehouse or goods shipped to a purchaser in Canada under certain circumstances, may be affected by these digital-economy measures. This also includes distribution platform operators who facilitate the supply of qualifying goods through a platform. The normal GST/HST registration, reporting and remittance regime is applicable to these non-resident vendors, non-resident digital platform operators and distribution platform operators.
Platform-based short-term accommodation
Suppliers of taxable supplies of short-term accommodation situated in Canada who are not registered under the normal GST/HST registration regime, or accommodation platform operators that facilitate such supplies through an accommodation platform, may be affected by these digital-economy measures. A simplified GST/HST registration, reporting and remittance regime is applicable to these accommodation platform operators.
For more information on these digital-economy measures: GST/HST for digital-economy businesses