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

PART 6General Provisions, Administration and Enforcement

Marginal note:Definitions

• 36 (1) The following definitions apply in this Part.

  Agency

  Agency means the Canada Revenue Agency continued by subsection 4(1) of the Canada Revenue Agency Act. (Agence)

  bank

  bank means a bank or an authorized foreign bank, as those terms are defined in section 2 of the Bank Act, that is not subject to the restrictions and requirements referred to in subsection 524(2) of that Act. (banque)

  business number

  business number means any number (other than a Social Insurance Number) used by the Minister to identify a person for the purposes of this Act. (numéro d’entreprise)

  Commissioner

  Commissioner means, except in sections 39, 105 and 122, the Commissioner of Revenue appointed under section 25 of the Canada Revenue Agency Act. (commissaire)

  judge

  judge, in respect of any matter, means a judge of a superior court having jurisdiction in the province in which the matter arises or a judge of the Federal Court. (juge)

  official

  official means a person who is employed in the service of, who occupies a position of responsibility in the service of, or who is engaged by or on behalf of, His Majesty in right of Canada or a province, or a person who was formerly so employed, who formerly occupied such a position or who formerly was so engaged. (fonctionnaire)

  record

  record means any material on which representations, in any form, of information or concepts are recorded or marked and that is capable of being read or understood by an individual or a computer system or other device. (registre)

  registration threshold

  registration threshold means the amount prescribed by regulation. (seuil d’inscription)

• Marginal note:Person resident in Canada

  (2) For the purposes of this Part, a person is deemed to be resident in Canada at any time

  • (a) in the case of a corporation, if the corporation is

    • (i) incorporated in Canada and not continued elsewhere, or

    • (ii) continued in Canada;

  • (b) in the case of a partnership, an unincorporated society, a club, an association or organization, or a branch thereof, if the member or participant, or a majority of the members or participants, having management and control thereof is or are resident in Canada at that time;

  • (c) in the case of a labour union, if it is carrying on activities as such in Canada and has a local union or branch in Canada at that time; and

  • (d) in the case of an individual, if the individual is deemed under any of paragraphs 250(1)(a) to (f) of the Income Tax Act to be resident in Canada at that time.

• Marginal note:Administration or enforcement

  (3) For greater certainty, a reference in this Part to the administration or enforcement of this Act includes the collection of any amount payable under this Act.

DIVISION ADuties of Minister

Marginal note:Minister’s duty

37 The Minister must administer and enforce this Act and the Commissioner may exercise the powers and perform the duties of the Minister under this Act.

Marginal note:Staff

• 38 (1) The persons that are necessary to administer and enforce this Act are to be appointed, employed or engaged in the manner authorized by law.

• Marginal note:Delegation of powers

  (2) The Minister may authorize any person who is employed or engaged by the Agency, or occupies a position of responsibility in the Agency, to exercise powers or perform duties of the Minister under this Act, including any judicial or quasi-judicial power or duty.

Marginal note:Administration of oaths

39 Any person, if so designated by the Minister, may administer oaths and take and receive affidavits, declarations and affirmations for the purposes of, or incidental to, the administration or enforcement of this Act, and every person so designated has for those purposes all the powers of a commissioner for administering oaths or taking affidavits.

Marginal note:Waiving the filing of documents

40 If any provision of this Act or a regulation requires a person to file a form or other document in the form and manner prescribed by the Minister (other than a return or a form, or other document, with respect to an election) or to provide information, prescribed by the Minister, the Minister may waive the requirement, but at the Minister’s request the person must provide the document or information by the date set out in the request.

DIVISION BRegistration

Marginal note:Requirement to register

• 41 (1) A taxpayer must apply to register under this Act on or before the earliest of

  • (a) January 31 of the year following the first year of application, if the taxpayer

    • (i) has Canadian digital services revenue greater than nil

      • (A) for the first year of application, or

      • (B) if the rate referred to in the description of B in subsection 10(2) is greater than nil, for any calendar year that is after 2021 and before the first year of application, and

    • (ii) would meet the conditions set out in paragraphs 10(1)(a) and (b) in respect of a calendar year for which the condition set out in subparagraph (i) is satisfied if the references to “in-scope revenue threshold” in paragraph 10(1)(b) were read as references to “registration threshold”; and

  • (b) January 31 of the year following a calendar year, after the first year of application, for which calendar year the taxpayer

    • (i) has Canadian digital services revenue greater than nil, and

    • (ii) would meet the conditions set out in paragraphs 10(1)(a) and (b) if the references to “in-scope revenue threshold” in paragraph 10(1)(b) were read as references to “registration threshold”.

• Marginal note:Waiving requirement under subsection (1)

  (2) The Minister may waive a taxpayer’s requirement under subsection (1), but at the Minister’s request the taxpayer must apply to register by the date set out in the request.

Marginal note:Application to register

• 42 (1) An application for registration under this Division must be made in the form and manner, and contain the information, prescribed by the Minister.

• Marginal note:Notification

  (2) The Minister may register any taxpayer that applies for registration under this Act and, if the Minister does so, the Minister must notify the taxpayer of the effective date of the registration and of the registration number assigned to the taxpayer.

Marginal note:De-registration

• 43 (1) The Minister may, upon request by a taxpayer, de-register the taxpayer at any time if the Minister is satisfied that the taxpayer would not have met the conditions set out in paragraphs 10(1)(a) and (b) — in respect of any of the three calendar years immediately preceding that time — if the references to “in-scope revenue threshold” in paragraph 10(1)(b) were read as references to “registration threshold”.

• Marginal note:Consequences of de-registration

  (2) A taxpayer that is, at a particular time, de-registered under subsection (1) is deemed for the purpose of applying subsection 41(1) at any time subsequent to the particular time

  • (a) not to have applied for registration before the particular time; and

  • (b) not to have met the conditions set out in paragraph 41(1)(b) before the particular time.

• Marginal note:Notification

  (3) If the Minister de-registers a taxpayer under this section, the Minister must notify the taxpayer of the de-registration and the effective date of the de-registration.

Marginal note:Notice of intent

• 44 (1) If the Minister has reason to believe that a taxpayer that is not registered under this Act is required to apply to register and has failed to do so as and when required, the Minister may send a notice of intent in writing to the taxpayer that the Minister proposes to register the taxpayer under this Act.

• Marginal note:Notice of intent — requirement to register

  (2) On receipt of a notice of intent, a taxpayer must apply to register or establish to the satisfaction of the Minister that the taxpayer is not required to do so.

• Marginal note:Notice of intent — notification of registration

  (3) If, after 60 days after the day on which a notice of intent was sent by the Minister to a taxpayer, the taxpayer has not applied to register and the Minister is not satisfied that the taxpayer is not required to apply to register, the Minister may register the taxpayer and, on doing so, must notify the taxpayer of the effective date of the registration and the registration number assigned to the taxpayer.

DIVISION CReturns

Marginal note:Requirement to file return

45 A taxpayer must file a return — in the form and manner, and containing the information, prescribed by the Minister — for a particular calendar year, on or before June 30 of the following calendar year, if

• (a) the particular calendar year is the first year of application and the taxpayer

  • (i) has Canadian digital services revenue greater than nil

    • (A) for the first year of application, or

    • (B) if the rate referred to in the description of B in subsection 10(2) is greater than nil, for any calendar year that is after 2021 and before the first year of application, and

  • (ii) meets the conditions set out in paragraphs 10(1)(a) and (b) in respect of a calendar year for which the condition set out in subparagraph (i) is satisfied; or

• (b) the particular calendar year is after the first year of application and the taxpayer

  • (i) has Canadian digital services revenue greater than nil for the particular calendar year, and

  • (ii) meets the conditions set out in paragraphs 10(1)(a) and (b) in respect of the particular calendar year.

Marginal note:Election — designated entity

• 46 (1) A taxpayer that is a constituent entity of a consolidated group at any time in a particular calendar year (other than a taxpayer that is a constituent entity of more than one consolidated group during the particular calendar year) may jointly elect, in respect of the particular calendar year, with one or more other constituent entities of the group (including a particular constituent entity) to designate the particular constituent entity (referred to in this Act as the “designated entity”) by making an election on or before June 30 of the following calendar year in the form and manner, and containing the information, prescribed by the Minister.

• Marginal note:Election — consequences

  (2) If a taxpayer elects to designate an entity under subsection (1) in respect of a calendar year

  • (a) the designated entity must act on behalf of the taxpayer for the purposes of this Part in respect of the year;

  • (b) any action taken by the designated entity on behalf of the taxpayer for the purposes of this Part in respect of the year is deemed to have been performed by the taxpayer; and

  • (c) the Minister must direct to the designated entity and the taxpayer any communication for the purposes of this Part as it applies to the taxpayer in respect of the year.

• Marginal note:Application for registration — designated entity

  (3) If a taxpayer elects to designate an entity under subsection (1) that is not registered under this Act, the designated entity must, at the time of the election, make an application to register in the form and manner, and containing the information, prescribed by the Minister.

Marginal note:Extension of time

• 47 (1) The Minister may at any time extend the time for filing a return, form or other document, providing information, or making an election under this Act.

• Marginal note:Effect of extension

  (2) If the Minister extends the time for filing a return, form or other document, providing information or making an election under subsection (1),

  • (a) the return, form or other document must be filed, the information must be provided or the election must be made within the time so extended; and

  • (b) in the case of a return, any penalty payable under section 84 in respect of the return must be determined as though the return were required to be filed on the day on which the extended time expires.

Marginal note:Demand for return

48 A taxpayer must, on demand sent by the Minister, file, within any reasonable time that may be specified in the demand, a return under this Act for any calendar year that is designated in the demand.

DIVISION DPayments

Marginal note:Payments

49 The tax payable under this Act by a taxpayer in respect of a calendar year must be paid on or before June 30 of the following calendar year.

Marginal note:Manner and form of payments

50 Every person that is required under this Act to pay tax or any other amount must make the payment to the account of the Receiver General for Canada in the manner and form prescribed by the Minister.

Marginal note:Assessment of another constituent entity

• 51 (1) The Minister may assess a particular constituent entity of a consolidated group in respect of tax and other amounts payable under this Act by another constituent entity of the group. If such an assessment is made, the particular constituent entity is jointly and severally, or solidarily, liable with the other constituent entity to pay the amount assessed and this Part applies to the particular constituent entity in respect of the amount assessed with any modifications that the circumstances require.

• Marginal note:Limitation

  (2) Subsection (1) does not limit the liability of the other constituent entity under any other provision of this Act or the liability of the particular constituent entity for the interest that the particular constituent entity is liable to pay under this Act on an assessment in respect of the amount that the particular constituent entity is liable to pay because of that subsection.

• Marginal note:Rules applicable

  (3) If a particular constituent entity of a consolidated group and another constituent entity of the group become, because of subsection (1), jointly and severally, or solidarily, liable in respect of part or all of the liability of the other constituent entity under this Act, the following rules apply:

  • (a) a payment by the particular constituent entity on account of the particular constituent entity’s liability discharges, to the extent of the payment, the joint liability; and

  • (b) a payment by the other constituent entity on account of the other constituent entity’s liability discharges the particular constituent entity’s liability only to the extent that the payment operates to reduce that liability to an amount less than the amount in respect of which the particular constituent entity is, because of subsection (1), jointly and severally, or solidarily, liable.

Marginal note:Definition of transaction

• 52 (1) In this section and section 87, a transaction includes an arrangement or event.

• Marginal note:Tax liability — property transferred not at arm’s length

  (2) If at any time a person transfers property, either directly or indirectly, by means of a trust or by any other means, to another person with which the transferor was not, at that time, dealing at arm’s length, the transferee and transferor are jointly and severally, or solidarily, liable to pay under this Act an amount equal to the lesser of

  • (a) the amount determined by the formula

    A − (B − C)

    where

    A

    is the amount, if any, by which the fair market value of the property at that time exceeds the fair market value at that time of the consideration given by the transferee for the transfer of the property,

    B

    is the total of all amounts, if any, the transferee was assessed under subsection 325(2) of the Excise Tax Act, paragraph 97.44(1)(b) of the Customs Act, subsection 160(2) of the Income Tax Act, subsection 297(3) of the Excise Act, 2001, subsection 161(3) of the Greenhouse Gas Pollution Pricing Act, subsection 80(3) of the Underused Housing Tax Act or subsection 150(4) of the Select Luxury Items Tax Act in respect of the property, and

    C

    is the amount paid by the transferor in respect of the amount determined for B, and

  • (b) the total of all amounts each of which is

    • (i) an amount that the transferor is liable to pay under this Act in respect of

      • (A) the calendar year that includes that time, or

      • (B) any preceding calendar year, or

    • (ii) interest or penalties (other than amounts included in subparagraph (i)) for which the transferor is liable at that time.

• Marginal note:Limitation

  (3) Subsection (2) does not limit the liability of the transferor under any other provision of this Act or the liability of the transferee for the interest that the transferee is liable to pay under this Act on an assessment in respect of the amount that the transferee is liable to pay because of that subsection.

• Marginal note:Fair market value of undivided interest or right

  (4) For the purposes of this section, the fair market value at any time of an undivided interest in, or for civil law an undivided right in, a property that is expressed as a proportionate interest or right in that property is deemed to be equal to the same proportion of the fair market value of that property at that time.

• Marginal note:Assessment

  (5) Despite subsection 70(1), the Minister may at any time assess a transferee in respect of any amount payable because of this section and this Part applies to the transferee with any modifications that the circumstances require.

• Marginal note:Rules applicable

  (6) If a transferor and transferee become, because of subsection (2), jointly and severally, or solidarily, liable in respect of part or all of the liability of the transferor under this Act, the following rules apply:

  • (a) a payment by the transferee on account of the transferee’s liability discharges, to the extent of the payment, the joint liability; and

  • (b) a payment by the transferor on account of the transferor’s liability discharges the transferee’s liability only to the extent that the payment operates to reduce the transferor’s liability to an amount less than the amount in respect of which the transferee is, because of subsection (2), jointly and severally, or solidarily, liable.

• Marginal note:Anti-avoidance rules

  (7) For the purposes of subsections (1) to (6), if a person (referred to in this section as the “transferor”) has transferred property either directly or indirectly, by means of a trust or by any other means whatever to another person (referred to in this section as the “transferee”) in a transaction or as part of a series of transactions, the following rules apply:

  • (a) the transferor is deemed to not be dealing at arm’s length with the transferee at all times in the transaction or series of transactions if

    • (i) the transferor and the transferee do not deal at arm’s length at any time during the period beginning immediately before the transaction or series of transactions and ending immediately after the transaction or series of transactions, and

    • (ii) it is reasonable to conclude that one of the purposes of undertaking or arranging the transaction or series of transactions is to avoid joint and several, or solidary, liability of the transferee and the transferor under this section for an amount payable under this Act;

  • (b) an amount that the transferor is liable to pay under this Act (including, for greater certainty, an amount that the transferor is liable to pay under this section, regardless of whether the Minister has made an assessment under subsection (5) in respect of that amount) is deemed to have become payable in the calendar year in which the property was transferred, if it is reasonable to conclude that one of the purposes of the transfer of the property is to avoid the payment of a future amount payable under this Act by the transferor or transferee; and

  • (c) the amount determined for A in paragraph (2)(a) is deemed to be the greater of

    • (i) the amount otherwise determined for A in paragraph (2)(a) without reference to this paragraph, and

    • (ii) the amount determined by the formula

      A − B

      where

      A

      is the fair market value of the property at the time of the transfer, and

      B

      is

      • (A) the lowest fair market value of the consideration (that is held by the transferor) given for the property at any time during the period beginning immediately before the transaction or series of transactions and ending immediately after the transaction or series of transactions, or

      • (B) if the consideration is in a form that is cancelled or extinguished during the period referred to in clause (A),

        • (I) the amount that is the lower of the amount determined under clause (A) and the fair market value during that period of any property, other than property that is cancelled or extinguished during the period, that is substituted for the consideration referred to in clause (A), or

        • (II) if no property is substituted for the consideration referred to in clause (A), other than property that is cancelled or extinguished during the period, nil.