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

Marginal note:Trustee as agent or mandatary

26 If a taxpayer has become a bankrupt and a trustee becomes the trustee in bankruptcy of the taxpayer, the trustee is deemed to be the agent or mandatary of the bankrupt for all purposes of this Act and any revenue of the trustee from carrying on the business of the bankrupt is deemed to be revenue of the bankrupt and not of the trustee.

Marginal note:Tax payable for bankruptcy

• 27 (1) If during a particular calendar year there is a bankruptcy day of a taxpayer,

  • (a) section 10 does not apply in respect of the particular calendar year, any bankrupt year or a calendar year during which the pre-discharge period, if any, occurs;

  • (b) the taxpayer must pay a tax in respect of the pre-bankruptcy period equal to 3% of the taxpayer’s taxable Canadian digital services revenue for the pre-bankruptcy period determined in accordance with section 31;

  • (c) subject to subsection (2), the trustee, and not the taxpayer, must pay a tax in respect of each of the bankruptcy period and, if any, the pre-discharge period equal to 3% of the taxpayer’s taxable Canadian digital services revenue for the period determined in accordance with section 31; and

  • (d) subject to subsection (2), the trustee, and not the taxpayer, must pay a tax in respect of any bankrupt year equal to 3% of the taxpayer’s taxable Canadian digital services revenue for the year.

• Marginal note:Trustee — exception

  (2) A trustee is not liable for the payment of any amount for which a receiver is liable under section 29.

Marginal note:Filing and payment

• 28 (1) If section 27 applies in respect of a bankruptcy day of a taxpayer during a particular calendar year,

  • (a) sections 45 and 49 do not apply to the taxpayer in respect of the particular calendar year, any bankrupt year or a calendar year during which the pre-discharge period, if any, occurs;

  • (b) subject to subsection (2), the trustee must file all returns — in the form and manner, and containing the information, prescribed by the Minister — in respect of any year or period referred to in paragraph 27(1)(c) or (d) for which the trustee is liable to pay tax greater than nil, and pay the tax payable under this Act in respect of the year or period, on or before the day that is 90 days after the last day of the year or period; and

  • (c) subject to subsection (2), the trustee must, unless the Minister waives the requirement in writing, file any return that is required to be filed by the taxpayer in respect of the calendar year immediately preceding the particular calendar year or in respect of the pre-bankruptcy period — in the form and manner, and containing the information, prescribed by the Minister — on or before the day that is 90 days after the bankruptcy day.

• Marginal note:Trustee — exception

  (2) If there is a receiver with authority in respect of any business, property, affairs or assets of a taxpayer referred to in subsection (1), the trustee is not required to include in any return any information that the receiver is required under section 30 to include in a return.

Marginal note:Tax payable for receivership

29 If during a particular calendar year there is a receivership day of a taxpayer,

• (a) if the receiver is a receiver-manager,

  • (i) section 10 does not apply in respect of the particular calendar year, any year in receivership or a calendar year during which the pre-cease period, if any, occurs,

  • (ii) the taxpayer must pay a tax in respect of the pre-receivership period equal to 3% of the taxpayer’s taxable Canadian digital services revenue for the pre-receivership period determined in accordance with section 31,

  • (iii) the receiver-manager, and not the taxpayer, must pay a tax in respect of each of the receivership period and, if any, the pre-cease period equal to 3% of the taxpayer’s taxable Canadian digital services revenue for the period determined in accordance with section 31, and

  • (iv) the receiver-manager, and not the taxpayer, must pay a tax in respect of any year in receivership equal to 3% of the taxpayer’s taxable Canadian digital services revenue for the year; and

• (b) in any other case,

  • (i) the receiver must pay

    • (A) a tax in respect of each of the receivership period and, if any, the pre-cease period equal to 3% of the portion of the taxpayer’s Canadian digital services revenue for the period (determined in accordance with section 31) that is online marketplace services revenue, online advertising services revenue, social media services revenue and user data revenue earned by the taxpayer for the period that can reasonably be considered to relate to the relevant assets of the receiver, and

    • (B) a tax in respect of any year in receivership, equal to 3% of the portion of the taxpayer’s Canadian digital services revenue for the year that is online marketplace services revenue, online advertising services revenue, social media services revenue and user data revenue earned by the taxpayer for the year that can reasonably be considered to relate to the relevant assets of the receiver, and

  • (ii) for the purpose of section 10, the taxpayer’s taxable Canadian digital services revenue in respect of the particular calendar year, any years in receivership and a calendar year during which the pre-cease period, if any, occurs is determined as if online marketplace services revenue, online advertising services revenue, social media services revenue and user data revenue of the taxpayer for the year did not include revenue that is included in the portion of Canadian digital services revenue described in clause (b)(i)(A) or (B).

Marginal note:Filing and payment

30 If section 29 applies in respect of a receivership day of a taxpayer during a particular calendar year,

• (a) if the receiver is a receiver-manager,

  • (i) sections 45 and 49 do not apply to the taxpayer in respect of the particular calendar year, any year in receivership or a calendar year during which the pre-cease period, if any, occurs,

  • (ii) the receiver-manager must file all returns — in the form and manner, and containing the information, prescribed by the Minister — in respect of any year or period referred to in subparagraph 29(a)(iii) or (iv) for which the receiver-manager is liable to pay tax greater than nil, and pay the tax payable under this Act in respect of the year or period, on or before the day that is 90 days after the last day of the year or period, and

  • (iii) the receiver-manager must, unless the Minister waives the requirement in writing, file any return that is required to be filed by the taxpayer in respect of the calendar year immediately preceding the particular calendar year or in respect of the pre-receivership period — in the form and manner, and containing the information, prescribed by the Minister — on or before the day that is 90 days after the receivership day; and

• (b) in any other case, the receiver must file all returns — in the form and manner, and containing the information, prescribed by the Minister — in respect of any year or period referred to in subparagraph 29(b)(i) for which the receiver is liable to pay tax greater than nil, and pay the tax payable under this Act in respect of the year or period, on or before the day that is 90 days after the last day of the year or period.

Marginal note:Non-calendar year periods

• 31 (1) For the purposes of sections 27 and 29, a taxpayer’s taxable Canadian digital services revenue or Canadian digital services revenue for a pre-bankruptcy period, bankruptcy period, pre-discharge period, pre-receivership period, receivership period or pre-cease period is the taxable Canadian digital services revenue or Canadian digital services revenue of the taxpayer, determined in accordance with Parts 3 and 4, with the following modifications:

  • (a) the references in Parts 3 and 4 to “calendar year” (except in the descriptions of E and F in section 24) are to be read as references to “pre-bankruptcy period”, “bankruptcy period”, “pre-discharge period”, “pre-receivership period”, “receivership period” or “pre-cease period”, as the case may be;

  • (b) the references in Parts 3 and 4 to “year” (except in the descriptions of E and F in section 24) are to be read as references to “period”;

  • (c) paragraphs (a) and (b) of the definition relevant time in section 23 are to be read as follows:

    • “(a) the first moment of the first day of the period;

    • (b) the last moment of the last day of the period;”

  • (d) paragraph (a) of the description of B in section 24 does not apply; and

  • (e) subsections 12(2) and (3) do not apply.

• Marginal note:Administration and enforcement

  (2) Except as otherwise provided in this Division, Part 6 applies, with any modifications that the circumstances require, to any taxpayer, trustee or receiver in respect of any year or period referred to in this Division.

Marginal note:Certificates for receivers

• 32 (1) Every receiver that controls property of a taxpayer that is, or can reasonably be expected to become, required to pay any amount under this Act must, before distributing the property to any person, obtain a certificate from the Minister certifying that the following amounts have been paid, or that security for the payment of them has been accepted by the Minister, in accordance with this Act:

  • (a) all amounts that are payable under this Act by the taxpayer or the receiver (in that capacity) in respect of any calendar year, or period, preceding the calendar year, or period, during which the distribution is made; and

  • (b) all amounts that can reasonably be expected to become payable under this Act by the taxpayer or the receiver (in that capacity) in respect of the calendar year or period during which the distribution is made, or any previous calendar year or period.

• Marginal note:Liability for failure to obtain certificate

  (2) Any receiver that distributes property without obtaining a certificate in respect of the amounts referred to in subsection (1) is personally liable for the payment of those amounts to the extent of the value of the property so distributed.

DIVISION BPartnerships

Marginal note:Partnerships

• 33 (1) For the purposes of this Act, anything done by a person as a member of a partnership is deemed to have been done by the partnership in the course of the partnership’s activities and not to have been done by the person.

• Marginal note:Joint and several or solidary liability

  (2) A partnership and each member or former member (each of which is referred to in this subsection as the “member”) of the partnership (other than a member that is a limited partner and is not a general partner) are jointly and severally, or solidarily, liable for

  • (a) the payment of all amounts that are required to be paid by the partnership under this Act before or during the period during which the member is a member of the partnership or, if the member was a member of the partnership at the time the partnership was dissolved, after the dissolution of the partnership, except that

    • (i) the member is liable for the payment of amounts that become payable before the period only to the extent of the property that is regarded as property of the partnership under the relevant laws of general application to partnerships in force in a province or other jurisdiction, and

    • (ii) the payment by the partnership or by any member of the partnership of an amount in respect of the liability discharges their liability to the extent of that amount; and

  • (b) all other obligations under this Act that arose before or during that period for which the partnership is liable or, if the member was a member of the partnership at the time the partnership was dissolved, the obligations that arose upon or as a consequence of the dissolution.

DIVISION CAnti-avoidance

Marginal note:Definitions

• 34 (1) The following definitions apply in this Division.

  tax benefit

  tax benefit means a reduction, avoidance or deferral of tax or other amount payable under this Act or an increase in a refund of tax or other amount under this Act. (avantage fiscal)

  tax consequences

  tax consequences to a person means the amount of tax or other amount payable by, or refundable to, the person under this Act, or any other amount that is relevant for the purposes of computing that amount. (attribut fiscal)

  transaction

  transaction includes an arrangement or event. (opération)

• Marginal note:General anti-avoidance rule

  (2) If a transaction is an avoidance transaction, the tax consequences to a person are to be determined as is reasonable in the circumstances in order to deny a tax benefit that, in the absence of this section, would result, directly or indirectly, from that transaction or from a series of transactions that includes that transaction.

• Marginal note:Avoidance transaction

  (3) An avoidance transaction means any transaction

  • (a) that, in the absence of this section, would result, directly or indirectly, in a tax benefit, unless the transaction may reasonably be considered to have been undertaken or arranged primarily for bona fide purposes other than to obtain the tax benefit; or

  • (b) that is part of a series of transactions, which series, in the absence of this section, would result, directly or indirectly, in a tax benefit, unless the transaction may reasonably be considered to have been undertaken or arranged primarily for bona fide purposes other than to obtain the tax benefit.

• Marginal note:Application of subsection (2)

  (4) Subsection (2) applies to a transaction only if it may reasonably be considered that the transaction

  • (a) would, if this Act were read without reference to this section, result directly or indirectly in a misuse of the provisions of any one or more of

    • (i) this Act,

    • (ii) the Digital Services Tax Regulations, or

    • (iii) any other enactment that is relevant in computing tax or any other amount payable by or refundable to a person under this Act or in determining any amount that is relevant for the purposes of that computation; or

  • (b) would result directly or indirectly in an abuse having regard to those provisions, other than this section, read as a whole.

• Marginal note:Determination of tax consequences

  (5) Without restricting the generality of subsection (2) and despite any other enactment, in determining the tax consequences to a person as is reasonable in the circumstances in order to deny a tax benefit that would, in the absence of this section, result directly or indirectly from an avoidance transaction

  • (a) any deduction, exemption or exclusion in computing Canadian digital services revenue, taxable Canadian digital services revenue or tax payable or any part thereof may be allowed or disallowed in whole or in part;

  • (b) any such deduction, exemption or exclusion, any revenue or other amount or part thereof may be allocated to any person;

  • (c) the nature of any payment or other amount may be recharacterized; and

  • (d) the tax effects that would otherwise result from the application of other provisions of this Act may be ignored.

• Marginal note:Request for adjustments

  (6) If, with respect to a transaction, a notice of assessment involving the application of subsection (2) with respect to the transaction has been sent to a person, then any person (other than a person to which such a notice has been sent) is entitled, within 180 days after the day of sending of the notice, to request in writing that the Minister make an assessment applying subsection (2) with respect to that transaction.

• Marginal note:Exception

  (7) Despite any other provision of this Act, the tax consequences to any person, following the application of this section, are only to be determined through a notice of assessment involving the application of this section.

• Marginal note:Duties of Minister

  (8) On receipt of a request by a person under subsection (6), the Minister must, without delay, consider the request and, despite subsection 70(1), assess the person. However, an assessment may be made under this subsection only to the extent that it may reasonably be regarded as relating to the transaction referred to in subsection (6).

Marginal note:Series of transactions

35 For the purposes of this Division, a series of transactions is deemed to include any related transactions completed in contemplation of the series.