Netflix, PlayStation and Other Digital Services to Start Charging Tax on July 1
By Simon Hung
June 2, 2021Digital services in Canada will cost more than usual starting next month, as the Government of Canada is set to enact new legislation that will require companies to charge sales tax on digital goods.
The new legislation will take effect on Thursday, July 1 and impact several well-known companies including Airbnb, Disney+, Netflix, PlayStation, Spotify and others.
In the past, foreign-based companies without a physical presence in Canada were not required to charge sales tax on digital goods and services. As a result, digital products like Netflix subscriptions and PlayStation Store video games were tax-free to most Canadians, as both companies operated in the United States. This loophole did not apply to companies like Apple and Microsoft, who have physical business operations in Canada and therefore required to charge sales tax on digital purchases.
The new federal legislation was first proposed by the Liberal Party in 2019 and finalized in their 2020 Fall Economic Statement (Section 4.8). The initial proposal called for a launch timetable of 2022, but that was fast-tracked to 2021 due to the rise of digital sales during the COVID-19 pandemic.
According to the federal government, the new measures are designed to "level the playing field", as the loophole created an unfair advantage for foreign-based companies selling digital goods in Canada. The Department of Finance estimates that the new legislation will generate an extra $1.2 billion in revenue over the next five years starting in 2021-22.
The changes will affect nearly every Canadian province and territory, with the exception of Quebec and Saskatchewan, as those provinces had existing laws that required companies to charge provincial sales tax regardless of their operating location.
Sales tax will vary depending on the GST/HST rate in your province and we've listed the federal tax rates for all 13 Canadian provinces and territories below (figures do not include provincial tax rates, where effective).
- 5% GST – Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Quebec, Saskatchewan and Yukon
- 13% HST – Ontario
- 15% HST – New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island
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Source: Government of Canada, with reports from CBC
Showing 28 Most Recent Comments
View allAltho the title of this thread refers to a Digital Services Tax
It’s actually a Goods & SERVICES Tax … be that GST alone, or HST
Dependent on the Province you live in
(Some Provinces have evidently now made PST a thing on such services as well … so double taxed )
On things one downloads for personal use
Which used to be tax free
.
.
.
The DST (Digital Services Tax ) <—— which is a REAL NEW Cdn Tax
Is a business tax
https://www.canada.ca/en/department-fin ... x-act.html
@Dhanushan … you really should DELETE your posts
As they aren’t on theme
And start a new thread perhaps titled
Canada to impose new DST (Digital Services Tax) on some businesses
Starting April 1st, Amazon was required to collect provincial sales tax (7%) on all digital purchases
https://www.surreynowleader.com/busines ... s-april-1/
The thread title is wrong.
The digital services tax (DST) starts Jan. 1, 2022
DST is separate from GST/HST
"The DST would apply at a rate of 3 per cent on revenue from certain digital services reliant on the engagement, data and content contributions of Canadian users. For greater certainty, revenue would not include any applicable value-added tax or sales tax amounts collected on the revenue transaction."
"The DST would apply to businesses organized under various forms including corporations, trusts and partnerships."
In the Federal 2021 Budget, the Liberal government confirmed its intention to:
From Taxing the Internet: An overview of Canada's approach to taxing the digital economy
I thought it may have a been a mistake for 5% GST (since ebooks have GST), but maybe audiobooks are not the same classification as ebooks? I didn't contact CS at the time because the amount wasn't a huge difference on a low price purchase.
In the Federal 2021 Budget, the Liberal government confirmed its intention to:
From Taxing the Internet: An overview of Canada's approach to taxing the digital economy
form Netflix Canada’s first hire for new Toronto office to be focused on taxes
Part of the problem for me is their business model. It's not easy finding a new show that you like. Netflix shows don't usually go the distance, so it's continually having to try to find another one worthwhile to watch.
took so long, but understand it's not just netflix but the whole online services and taxes, much like how some sellers on amazon don't charge taxes while the bigger sellers do, not sure if its location or the smaller sellers don't reach threshold to collect but i doubt its that
Most of the shows & films are all junk - they have not released anything good
I do really think that extra 3% tax is awful. Won't be a way around that one
Before, if the company did not have physical servers located in Canada, no tax was collected.
Topic here:
canadian-government-start-collecting-ta ... 1-2425984/
Now every company has to collect and resubmit that money to the Canadian government if they sell digital goods or services to Canadians regardless of whether or not they have physical servers located within Canada.
"The DST would apply at a rate of 3 per cent on revenue from certain digital services reliant on the engagement, data and content contributions of Canadian users. For greater certainty, revenue would not include any applicable value-added tax or sales tax amounts collected on the revenue transaction."
"The DST would apply to businesses organized under various forms including corporations, trusts and partnerships."
In Ontario, HST is 13%
https://www.canada.ca/en/revenue-agency ... or.html#rt
Thank you,. Offshore Tax haven is still free.
from Questions About Tax
The following tax rates apply to the Netflix service:
GST/HST for digital economy businesses: Overview
https://www.canada.ca/en/revenue-agency ... onomy.html
A Digital Services Tax (DST) of 3% is coming January 1st, 2022.
https://www.budget.gc.ca/2021/report-ra ... x7-en.html
Digital Services Tax Consultation
Current Status: Open until June 18, 2021
https://www.canada.ca/en/department-fin ... ation.html