Canada’s New Tax Rules For Cross-Border Digital Economy

Canada’s new GST / HST regime came into effect on July 1, 2021 for cross-border digital services and products.

Under the regime, non-resident vendors of cross-border digital services and products, and certain online platforms that sell to Canadian consumers must register with the Canada Revenue Agency (“CRA”) and charge and remit GST / HST if their total taxable supplies are $ CAD 30,000.00 or more over a 12 month period. Even if a business is not required to register, charge, and collect GST/HST, their customers may have to begin paying GST/HST to a digital platform operator on their supplies if they are facilitated through a digital platform.

The types of businesses affected include:

• online music streaming
• traditional services businesses
• digital platform operators
• goods that are delivered or made available in Canada

The following GST / HST rates will apply depending on where the consumer lives:

• 13 % HST Ontario
• 15 % HST New Brunswick, Nova Scotia, Newfoundland, Prince Edward Island
• 5% GST Alberta, British Columbia, Manitoba, Quebec, Saskatchewan, Northwest Territories,
Nunuvat, Yukon

The Canadian Government says that it expects affected businesses and platform operators to comply with their obligations to register, collect and remit the GST/HST, as set out under the new rules to ensure that the GST/HST applies effectively and fairly to e-commerce transactions.