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

Marginal note:Limitation on appeals

• 77 (1) Despite section 75, if a person has filed a notice of objection to an assessment, the person may appeal to the Tax Court of Canada to have the assessment vacated, or a reassessment made, only with respect to

  • (a) an issue in respect of which the person has complied with subsection 72(2) in the notice and the relief sought in respect of the issue as specified in the notice; or

  • (b) an issue referred to in subsection 72(5), if the person was not required to file a notice of objection to the assessment that gave rise to the issue.

• Marginal note:No appeal if waiver

  (2) Despite section 75, a person is not permitted to appeal to the Tax Court of Canada to have an assessment vacated or varied in respect of an issue for which the person has waived the right of objection or appeal.

Marginal note:Institution of appeals

78 An appeal to the Tax Court of Canada under this Act must be instituted in accordance with the Tax Court of Canada Act.

Marginal note:Disposition of appeal

• 79 (1) The Tax Court of Canada may dispose of an appeal from an assessment by

  • (a) dismissing it; or

  • (b) allowing it and

    • (i) vacating the assessment,

    • (ii) varying the assessment, or

    • (iii) referring the assessment back to the Minister for reconsideration and reassessment.

• Marginal note:Partial disposition of appeal

  (2) If an appeal raises more than one issue, the Tax Court of Canada may, with the written consent of the parties to the appeal, dispose of a particular issue by

  • (a) dismissing the appeal with respect to the particular issue; or

  • (b) allowing the appeal with respect to the particular issue and

    • (i) varying the assessment, or

    • (ii) referring the assessment back to the Minister for reconsideration and reassessment.

• Marginal note:Disposal of remaining issues

  (3) If a particular issue has been disposed of under subsection (2), the appeal with respect to the remaining issues may continue.

• Marginal note:Appeal to Federal Court of Appeal

  (4) If the Tax Court of Canada has disposed of a particular issue under subsection (2), the parties to the appeal may, in accordance with the provisions of the Tax Court of Canada Act or the Federal Courts Act, as they relate to appeals from decisions of the Tax Court of Canada, appeal the disposition to the Federal Court of Appeal as if it were a final judgment of the Tax Court of Canada.

Marginal note:References to Tax Court of Canada

• 80 (1) The Minister and a person may agree that a question arising under this Act, in respect of any assessment or proposed assessment of the person, should be determined by the Tax Court of Canada.

• Marginal note:Time during consideration not to count

  (2) For the purposes of making an assessment, filing a notice of objection to an assessment or instituting an appeal from an assessment, the period beginning on the day on which proceedings are instituted in the Tax Court of Canada to have a question determined under subsection (1) and ending on the day on which the question is finally determined is not to be counted in the computation of

  • (a) the seven-year period referred to in subsection 70(1);

  • (b) the period within which a notice of objection to an assessment may be filed under section 72; and

  • (c) the period within which an appeal may be instituted under section 75.

Marginal note:Reference of common questions to Tax Court

• 81 (1) If the Minister is of the opinion that a question arising out of one and the same transaction or occurrence, or series of transactions or occurrences, is common to assessments or proposed assessments in respect of two or more persons, the Minister may apply to the Tax Court of Canada for a determination of the question.

• Marginal note:Contents of application

  (2) An application under subsection (1) must set out

  • (a) the question in respect of which the Minister requests a determination;

  • (b) the names of the persons that the Minister seeks to have bound by the determination; and

  • (c) the facts and reasons on which the Minister relies and on which the Minister based or intends to base the assessments of each person named in the application.

• Marginal note:Service

  (3) A copy of any application under subsection (1) must be served by the Minister on each person named in the application and on any other person that, in the opinion of the Tax Court of Canada, is likely to be affected by the determination of the question.

• Marginal note:Determination of question by Tax Court

  (4) If the Tax Court of Canada is satisfied that a determination of a question set out in an application under subsection (1) will affect assessments or proposed assessments in respect of two or more persons that have been served with a copy of the application, the Tax Court of Canada may make an order naming the persons in respect of which the question will be determined and may

  • (a) if none of the persons named in the order has appealed from such an assessment, proceed to determine the question in any manner that it considers appropriate; or

  • (b) if one or more of the persons named in the order has or have appealed, make any order that it considers appropriate joining a party or parties to that appeal or those appeals and proceed to determine the question in any manner that it considers appropriate.

• Marginal note:Determination final and conclusive

  (5) Subject to subsection (6), if a question set out in an application under subsection (1) is determined by the Tax Court of Canada, the determination is final and conclusive for the purposes of any assessments of persons named in an order by the Court under subsection (4).

• Marginal note:Appeal

  (6) If a question set out in an application under subsection (1) is determined by the Tax Court of Canada, the Minister or any of the persons that have been served with a copy of the application and that are named in an order of the Court under subsection (4) may, in accordance with the provisions of this Act, the Tax Court of Canada Act or the Federal Courts Act, as they relate to appeals from decisions of the Tax Court of Canada, appeal from the determination.

• Marginal note:Parties to appeal

  (7) The parties that are bound by a determination under subsection (4) are parties to any appeal from the determination.

• Marginal note:Time during consideration not to count

  (8) For the purposes of making an assessment, filing a notice of objection to an assessment or instituting an appeal from an assessment, the period referred to in subsection (9) must not be counted in the computation of

  • (a) the seven-year period referred to in subsection 70(1);

  • (b) the period within which a notice of objection to an assessment may be filed under section 72; and

  • (c) the period within which an appeal may be instituted under section 75.

• Marginal note:Excluded periods

  (9) The period that is not to be counted in the computation of the periods referred to in paragraphs (8)(a) to (c) is the period beginning on the day on which a copy of an application made under this section is served on a person under subsection (3) and

  • (a) in the case of a person named in an order of the Tax Court of Canada under subsection (4), ending on the day on which the determination becomes final and conclusive; and

  • (b) in the case of any other person, ending on the day on which the person is served with a notice that the person has not been named in an order of the Tax Court of Canada under subsection (4).

Marginal note:Payment by the Minister on appeal

• 82 (1) If the Tax Court of Canada, the Federal Court of Appeal or the Supreme Court of Canada has, on the disposition of an appeal in respect of taxes, interest or a penalty payable under this Act by a person, referred an assessment back to the Minister for reconsideration and reassessment, or varied or vacated an assessment, the Minister must, without delay, whether or not an appeal from the decision of the Court has been or may be instituted,

  • (a) where the assessment has been referred back to the Minister, reconsider the assessment and make a reassessment in accordance with the decision of the Court unless otherwise directed in writing by the person; and

  • (b) refund any overpayment resulting from the variation, vacation or reassessment.

  The Minister may repay any tax, interest or penalties or surrender any security accepted by the Minister for tax, interest or penalties to that person or any other person that has filed another objection or instituted another appeal if, having regard to the reasons given on the disposition of the appeal, the Minister is satisfied that it would be just and equitable to do so, but for greater certainty, the Minister may, in accordance with the provisions of this Act, the Tax Court of Canada Act, the Federal Courts Act or the Supreme Court Act as they relate to appeals from decisions of the Tax Court of Canada or the Federal Court of Appeal, appeal from the decision of the Court despite any variation or vacation of any assessment by the Court or any reassessment made by the Minister under paragraph (a).

• Marginal note:Interest on refund

  (2) If a refund is made under subsection (1) in respect of an assessment for a particular calendar year, interest at the rate prescribed by regulation must be paid for the period beginning on the day that is the later of July 30 of the following calendar year and the day on which the overpayment referred to in that subsection was paid and ending on the day on which the refund is paid.

DIVISION LPenalties

Marginal note:Failure to register when required

83 A taxpayer that does not apply to register as and when required under section 41 is liable to a penalty of $20,000 for each of

• (a) the calendar year in which it was required to apply to register;

• (b) the calendar year in which it registers (or is registered under section 44), if the year is different from the year referred to in paragraph (a); and

• (c) the calendar years, if any, between the years referred to in paragraphs (a) and (b).

Marginal note:Failure to file return when required

• 84 (1) A taxpayer that fails to file a return in respect of a calendar year as and when required under section 45 is liable to a penalty equal to the total of

  • (a) an amount equal to 5% of the taxpayer’s tax payable under this Act in respect of the year that was unpaid on the day on which the return was required to be filed, and

  • (b) the amount obtained when 1% of that unpaid tax is multiplied by the number of complete months, not exceeding 12, beginning on the day on which the return was required to be filed and ending on the day on which the return is filed.

• Marginal note:Repeated failure to file — conditions

  (2) Subsection (3) applies to a taxpayer in respect of a calendar year, if the taxpayer

  • (a) fails to file a return in respect of the year as and when required by section 45;

  • (b) fails to comply with a demand sent under section 48 for a return in respect of the year; and

  • (c) was, before the day on which the return referred to in paragraph (a) was required to be filed, liable to a penalty under subsection (1) for a return in respect of any of the three preceding calendar years.

• Marginal note:Repeated failure to file — penalty

  (3) If subsection (2) applies to a taxpayer in respect of a calendar year, the taxpayer is liable to a penalty equal to the total of

  • (a) an amount equal to 10% of the taxpayer’s tax payable under this Act in respect of the year that was unpaid on the day on which the return was required to be filed, and

  • (b) the amount obtained when 2% of that unpaid tax is multiplied by the number of complete months, not exceeding 20, beginning on the day on which the return was required to be filed and ending on the day on which the return is filed.

• Marginal note:False statements or omissions

  (4) A person who knowingly, or under circumstances amounting to gross negligence, makes or participates in, assents to, or acquiesces in the making of, a false statement or omission in a return, application, form, certificate, statement, document, invoice, record or answer (each of which is in this subsection referred to as a “return”) is liable to a penalty equal to the greater of $5,000 and 25% of the total of

  • (a) if the false statement or omission is relevant to the determination of an amount payable under this Act by the person, the amount, if any, by which

    • (i) the amount that is payable

    exceeds

    • (ii) the amount that would be payable if it were determined on the basis of the information provided in the return, and

  • (b) if the false statement or omission is relevant to the determination of a refund or any other payment that may be obtained under this Act, the amount, if any, by which

    • (i) the amount that would be the refund or other payment that would be payable if it were determined on the basis of the information provided in the return

    exceeds

    • (ii) the amount of the refund or other payment that is payable to the person.

Marginal note:Failure to provide information

85 A person that fails to provide any information or record as and when required under this Act, or as prescribed by regulation, is liable to a penalty of $2,500 for each such failure, in addition to any other penalty under this Act. However, the person is not liable in the case of any information or record required in respect of another person under subsection 66(1) or section 104 if a reasonable effort was made by the person to obtain the information or record.

Marginal note:Unreasonable appeal

86 If the Tax Court of Canada disposes of an appeal by a person in respect of an amount payable under this Act or if such an appeal has been discontinued or dismissed without trial, the Court may, on the application of the Minister and whether or not the Court awards costs, order the person to pay to the Receiver General for Canada an amount not exceeding 10% of any part of the amount that was in controversy in respect of which the Court determines that there were no reasonable grounds for the appeal, if in the opinion of the Court one of the main purposes for instituting or maintaining any part of the appeal was to defer the payment of any amount payable under this Act.

Marginal note:Definitions

• 87 (1) The following definitions apply in this section.

  planning activity

  planning activity includes

  • (a) organizing or creating, or assisting in the organization or creation of, an arrangement, an entity, a plan or a scheme; and

  • (b) participating, directly or indirectly, in the selling of an interest in, or the promotion of, an arrangement, an entity, a plan, a property or a scheme. (activité de planification)

  section 52 avoidance planning

  section 52 avoidance planning by a transferor or a transferee, means planning activity in respect of a transaction or series of transactions

  • (a) that is, or is part of, a section 52 avoidance transaction; and

  • (b) for which one of the purposes of the transaction or series of transactions is to reduce

    • (i) a transferee’s joint and several, or solidary, liability for tax owing under this Act by the transferor, or

    • (ii) the transferor’s or transferee’s ability to pay any amount that is or that may become owing under this Act. (planification d’évitement en vertu de l’article 52)

  section 52 avoidance transaction

  section 52 avoidance transaction means a transaction or series of transactions in respect of which

  • (a) the conditions set out in paragraph 52(7)(a) or (b) are met; or

  • (b) if subsection 52(7) applied to the transaction or series of transactions, the amount determined under subparagraph 52(7)(c)(ii) would exceed the amount determined under subparagraph 52(7)(c)(i). (opération d’évitement en vertu de l’article 52)

  transferee

  transferee refers to “transferee” as used in subsections 52(2) and (7). (bénéficiaire du transfert)

  transferor

  transferor refers to “transferor” as used in subsections 52(2) and (7). (auteur du transfert) 

• Marginal note:Section 52 avoidance penalty

  (2) Every transferor or transferee that engages in, participates in, assents to or acquiesces in planning activity that the transferor or transferee, as the case may be, knows is section 52 avoidance planning, or would reasonably be expected to know is section 52 avoidance planning, but for circumstances amounting to gross negligence, is liable to a penalty that is the lesser of

  • (a) 50% of the amount payable under this Act (determined without reference to this subsection), the joint and several, or solidary liability for which was sought to be avoided through the planning, and

  • (b) $100,000.