Digital Services Tax Act (S.C. 2024, c. 15, s. 96)

Short Title

Marginal note:Short title

1 This Act may be cited as the Digital Services Tax Act.

PART 1Interpretation and Application

Marginal note:Definitions

2 The following definitions apply in this Act.

acceptable accounting principles

acceptable accounting principles means

• (a) International Financial Reporting Standards; and

• (b) other country-specific generally accepted accounting principles relevant for corporations that are traded on a public securities exchange outside Canada and that require two or more entities to prepare consolidated financial statements in a manner similar to International Financial Reporting Standards. (principes comptables acceptables)

assessment

assessment means an assessment or a reassessment under this Act. (cotisation)

bankrupt

bankrupt has the same meaning as in section 2 of the Bankruptcy and Insolvency Act. (failli)

Canadian digital services revenue

Canadian digital services revenue means a taxpayer’s Canadian digital services revenue determined in accordance with Part 3. (revenu canadien de services numériques)

consolidated financial statements

consolidated financial statements means financial statements in which the assets, liabilities, income, expenses and cash flows of the members of a group are presented as those of a single economic entity. (états financiers consolidés)

consolidated group

consolidated group means an ultimate parent entity and one or more other entities that are required to prepare consolidated financial statements for financial reporting purposes under acceptable accounting principles, or would be so required if equity interests in the ultimate parent entity were traded on a public securities exchange, the trading on which requires the use of acceptable accounting principles. (groupe consolidé)

constituent entity

constituent entity, of a consolidated group, means

• (a) any entity of the group that

  • (i) is included in the consolidated financial statements of the group prepared in accordance with acceptable accounting principles, or

  • (ii) if the group is not required to prepare consolidated financial statements, or the statements are not prepared in accordance with acceptable accounting principles, would be required to be included in the consolidated financial statements of the group if equity interests in the ultimate parent entity of the group were traded on a public securities exchange, the trading on which requires the use of acceptable accounting principles; and

• (b) any entity that is excluded from the group’s consolidated financial statements solely because of size or materiality or on the grounds that it is held for sale. (entité constitutive)

digital content

digital content means

• (a) a digitally encoded text, video, image or sound recording;

• (b) computer software; or

• (c) any other thing that is digitally encoded and electronically transmittable.

It does not include a financial instrument. (contenu numérique)

digital interface

digital interface means a website, application or other electronic medium through which data or digital content is collected, viewed, consumed, delivered or interacted with. (interface numérique)

entity

entity means a person other than an individual. (entité)

financial instrument

financial instrument means

• (a) a security that is

  • (i) a share of the capital stock of a corporation,

  • (ii) an income or capital interest in a trust,

  • (iii) a note, bond, debenture or other evidence of indebtedness, or

  • (iv) an interest in a partnership;

• (b) money and a money market instrument that is a cheque, bill, certificate of deposit or derivative;

• (c) property that is a digital representation of value that functions as a medium of exchange and that only exists at a digital address of a publicly distributed ledger, other than property that

  • (i) confers a right, whether immediate or future and whether absolute or contingent, to exchange or redeem the property for specific property or services or to convert the property into specific property or services,

  • (ii) is primarily for use within, or as part of, a gaming platform, an affinity or rewards program or a similar platform or program, or

  • (iii) is property prescribed by regulation;

• (d) an insurance contract;

• (e) an annuity contract;

• (f) a precious metal;

• (g) a commodity;

• (h) an interest rate swap, currency swap, basis swap, interest rate cap, interest rate floor, commodity swap, equity swap, equity index swap or other similar agreement;

• (i) a guarantee, acceptance or indemnity in respect of anything described in paragraph (a), (f), (g) or (h);

• (j) any interest or right (including a futures or forward contract or option) in a future supply of anything described in any of paragraphs (a) to (i); and

• (k) any other property prescribed by regulation. (effet financier)

first year of application

first year of application means the calendar year that includes the day on which this Act comes into force or a subsequent calendar year, if any, prescribed by regulation in respect of a taxpayer. (première année d’application)

fiscal year

fiscal year means

• (a) in the case of a taxpayer, an accounting period with respect to which the taxpayer prepares its financial statements; and

• (b) in the case of a consolidated group, an accounting period with respect to which the ultimate parent entity of the group prepares its financial statements. (exercice)

global revenue threshold

global revenue threshold means an amount prescribed by regulation. (seuil de revenu global)

in-scope revenue threshold

in-scope revenue threshold means an amount prescribed by regulation. (seuil de revenu dans le champ d’application)

Minister

Minister means the Minister of National Revenue. (ministre)

online marketplace

online marketplace means a digital interface that allows users to interact with other users and facilitates the supply of property or services, including digital content, between those users, but does not include a digital interface

• (a) that has a single supplier of such property or services; or

• (b) the main purpose of which is to

  • (i) provide payment services by facilitating the electronic transfer of funds,

  • (ii) make advances, grant credit or lend money, or

  • (iii) facilitate the supply of financial instruments. (marché en ligne)

online search engine

online search engine means a digital interface that allows users to search the Web for digital content of multiple unrelated websites. (moteur de recherche en ligne)

online targeted advertisement

online targeted advertisement means an advertisement — including, for greater certainty, any content that is prominently placed for the purpose of promotion — that

• (a) consists of digital content;

• (b) is placed on, or transmitted through, a digital interface; and

• (c) is targeted at users based on any part of the user data associated with the users. (publicité en ligne ciblée)

person

person includes an individual, a trust, a partnership, a corporation and any other body of persons or organization of any kind. (personne)

prescribed

prescribed means

• (a) in the case of a form or the manner of filing a form, authorized by the Minister;

• (b) in the case of the information to be given on or with a form, specified by the Minister;

• (c) in the case of the manner of making or filing an election, authorized by the Minister; and

• (d) in any other case, prescribed by regulation or determined in accordance with rules prescribed by regulation. (Version anglaise seulement)

property

property means any property, whether real or personal, movable or immovable, tangible or intangible or corporeal or incorporeal, and includes a right or interest of any kind, a share, a chose in action and, for greater certainty, money. (bien)

regulation

regulation means a regulation made under this Act. (règlement)

social media platform

social media platform means a digital interface the main purpose of which is to allow users to find and interact with other users or with digital content generated by other users. (plateforme de médias sociaux)

supply

supply means the provision of property or a service in any manner, including sale, transfer, barter, exchange, licence, rental, lease, gift or disposition. (fourniture)

taxable Canadian digital services revenue

taxable Canadian digital services revenue means a taxpayer’s taxable Canadian digital services revenue determined in accordance with Part 4. (revenu canadien de services numériques imposable)

taxpayer

taxpayer means an entity, whether or not the entity is liable to pay tax under this Act, that is not a corporation, commission or association all of the shares, or the capital, of which is held, directly or indirectly, by one or more persons each of whom is His Majesty in right of Canada or a province. (contribuable)

total consolidated group revenue

total consolidated group revenue, of a consolidated group for a fiscal year, means the revenue reported in the group’s consolidated financial statements for the year or, if the statements are not prepared in accordance with acceptable accounting principles or no statements are prepared, the revenue that would be reported if the statements were prepared in accordance with International Financial Reporting Standards. However, total consolidated group revenue does not include the revenue of any entity that is not a taxpayer. (revenu consolidé total du groupe)

ultimate parent entity

ultimate parent entity means an entity in respect of which the following conditions are met: 

• (a) the entity holds directly or indirectly a sufficient interest in one or more other entities so that it is required to prepare consolidated financial statements under acceptable accounting principles or would be so required if the equity interests in the entity were traded on a public securities exchange, the trading on which requires the use of acceptable accounting principles; and

• (b) no other entity holds, directly or indirectly, an interest, as described in paragraph (a), in the entity. (entité mère ultime)

user

user means any individual (other than an individual acting in the course of an entity’s business) or entity (including an individual acting in the course of the entity’s business) that interacts (directly or indirectly in any manner whatever) with a digital interface, but does not include

• (a) the person that operates the digital interface;

• (b) if an entity operates the digital interface and the entity is a constituent entity of a consolidated group, another constituent entity of the group; or

• (c) an employee of an individual or entity described in paragraph (a) or (b) acting in the course of the individual’s or entity’s business. (utilisateur)

user data

user data means representations, in any form, of information or concepts generated by, or collected from, a user’s interaction (directly or indirectly in any manner whatever) with a digital interface. (données d’utilisateurs)

Marginal note:Negative or undefined results

3 An amount or number that is required under this Act to be determined in accordance with an algebraic formula is deemed to be nil if

• (a) the amount or number so determined would, in the absence of this section, be a negative amount or number; or

• (b) the result of the formula would be mathematically undefined.

Marginal note:Determination of revenue

• 4 (1) For the purposes of this Act, revenue of a taxpayer is to be determined in accordance with the acceptable accounting principles used in the preparation of the financial statements of the taxpayer or, if the statements are not prepared in accordance with acceptable accounting principles or no statements are prepared, in accordance with

  • (a) in the case of a taxpayer that is a constituent entity of a consolidated group,

    • (i) the acceptable accounting principles, if any, used in the preparation of the consolidated financial statements of the group, or

    • (ii) International Financial Reporting Standards; and

  • (b) in any other case, International Financial Reporting Standards.

• Marginal note:Currency of revenue — conversion

  (2) For the purposes of Part 2, if total revenue or total consolidated group revenue is expressed in a particular currency other than the currency in which the global revenue threshold is denominated, the amount is to be converted from the particular currency to that other currency using a rate of exchange that is acceptable to the Minister.

• Marginal note:Currency of revenue — Canadian dollar conversion

  (3) For the purposes of Part 3, if an amount of revenue is expressed in a currency other than Canadian dollars, the amount is to be converted from that currency to Canadian dollars using a rate of exchange that is acceptable to the Minister.

Marginal note:Short fiscal year — global revenue threshold

5 For the purposes of this Act, if a fiscal year is shorter than 12 months, a reference to the “global revenue threshold” in respect of the fiscal year is to be read as a reference to the amount determined by the formula