GST/HST for Non-resident Vendors of Digital Products and Services Effective July 2021

The Government of Canada announced a number of proposed GST/HST tax measures in Annex 4 relating to the digital economy in the Fall Economic Statement.

Three GST/HST measures were proposed in the announcement. As explained in greater detail below, the three measures are related to:

  • Cross-border digital products and cross-border services;
  • Goods supplied through fulfillment warehouses in Canada; and
  • Platform-based short-term accommodation.

The current GST/HST rules can often result in the GST/HST not being required to be collected on online purchases from non-resident vendors or made through digital platforms. Generally, the proposed measures will result in the GST/HST being required to be collected on these types of purchases that are considered under the proposed measures to be for consumption in Canada.

The proposed measures would start to apply on July 1, 2021:

  • The digital products and services measure, and the short-term accommodation measure, would apply to the affected supplies to the extent that the consideration for these supplies becomes due on or after July 1, 2021, or is paid on or after that day without having become due.
  • The fulfillment warehouse measure would apply to the affected supplies made on or after July 1, 2021, and to those made before July 1, 2021 if all of the consideration becomes due on or after July 1, 2021, or is paid on or after that date without having become due.

CRA published an FAQ on the application of the GST/HST in relation to electronic commerce supplies

Additional information, including the related draft legislation, can be found in the Sales Tax Measures announcement. The CRA is committed to providing taxpayers with up-to-date information.

The CRA will be releasing more detailed technical information regarding these proposed measures soon. Persons seeking additional technical information regarding the proposed measures can contact the CRA by calling GST/HST Rulings at 1-800-959-8287, and may also request a written technical explanation from GST/HST Rulings. The CRA also encourages taxpayers to check its website.