Tag Archives: Canada

Alerts, Canada

New Reporting Rules for Digital Platform Operators

Stately set of Corinthian Columns on a building in Montreal, Canada

On November 3, 2022, the Department of Finance introduced draft legislation to implement the reporting and due diligence standards of the Model Rules for Reporting by Platform Operators (the “Model Rules”) developed by the Organisation for Economic Co-operation and Development.

The draft legislation proposes to implement these Model Rules as part of the new Part XX of the Income Tax Act (Canada) (the “ITA”). Under the new Part XX, certain platform operators (“reporting platform operators”) would be required to determine the jurisdiction of residence of certain of the sellers on their platforms (“reportable sellers”) and to report certain information in respect of these reportable sellers and their activities subject to certain due diligence standards. These measures were initially announced as part of the 2022 Federal Budget. New Part XX of the ITA is proposed to come into force on January 1, 2024. A public consultation period for the draft legislation will run until January 6, 2023.

Reporting Platform Operators

Reporting platform operators are platform operators that are:

  • resident in Canada;
  • resident or incorporated or managed in a partner jurisdiction and who facilitates the provision of relevant activities by sellers resident in Canada or with respect to rental of immovable property located in Canada and elects to be a reporting platform operator; or
  • not resident in Canada or a partner jurisdiction, and who facilitates the provision of relevant activities by sellers resident in Canada or with respect to rental of immovable property located in Canada.

A platform operator is an entity that contracts directly or indirectly with sellers to make a software platform available for the sellers to be connected to other users for the (i) provision of relevant services including the rental of either immovable property or a means of transport or personal services, or (ii) the sale of goods. A platform also includes operations to collect compensation from users for the relevant activities (e.g. sale of goods, personal services, real property rentals) facilitated through the platform. Reporting platform operators are subject to the information reporting obligations under new Part XX unless they are an “excluded platform operator”.

Platform operators are excluded from the rules in Part XX if they can demonstrate that the platform’s underlying business model is such that sellers cannot derive a profit from compensation in connection with relevant activities through the platform, or that facilitate relevant activities through the platform only for sellers that are not reportable sellers.

There are further exemptions with respect to software platforms that exclusively facilitates the processing of compensation in relation to relevant activities; the mere listing or advertising of relevant activities; and the transfer of users to another platform, provided, in each case, that there is no further intervention in the provision of relevant activities.

Reportable Sellers

Reportable sellers will generally be active users (other than “excluded sellers”) that are determined by the reportable platform operator to:

  • be resident in a reportable jurisdiction;
  • have provided relevant services for the rental of immovable property located in a reportable jurisdiction; or
  • have been paid or credited consideration in connection with relevant services for the rental of immovable property located in a reportable jurisdiction.

A reportable jurisdiction is Canada or one of the partner jurisdictions with which there is an agreement in place to collect and share information in accordance with the Model Rules.

Specific exemptions will be provided for “excluded sellers” who generally include sellers of more than 2,000 relevant services for the rental of immovable property (i.e. large-scale hotels), governmental entities, certain public companies, and sellers with very low volume (less than 30 sales per year) and low value sales (not exceed €2,000 per year).

Reporting Requirements

Reporting platform operators would need to complete due diligence procedures to identify reportable sellers and their jurisdiction of residence including collection and verification of each reportable seller’s name, primary address, date of birth, tax identification number (“TIN”), the jurisdiction in which the TIN was issued, business registration number for entities, and the address of each property listed on the platform.

With respect to each reportable seller that provided relevant services, rented out a means of transportation or sold goods, the reporting platform operator is also required to report: (i) financial account identifiers to the extent available, (ii), the name of the holder of the financial account to which the consideration is paid or credited if such name is different from the name of the reportable seller, (iii) each jurisdiction in which the reportable seller is resident, (iv) the total consideration paid or credited during each quarter of the reportable period and the number of such relevant activities or relevant services in respect of which it was paid or credited, and (v) any fees, commissions or taxes withheld or charged by the reporting platform operator during each quarter of the reportable period.

With respect to each reportable seller that provided relevant services for the rental of immovable property, the reporting platform operator is also required to report the address of each property listing and, if available, the land registration number and where available, the number of days each property listing was rented during the reportable period and the type of each property listing.

The reporting platform operator is also required to determine whether the information collected is reliable, using all records available to the reporting platform operator, as well as any publicly available electronic interface to ascertain the validity of the TIN.

The reporting platform operator would be required to report to the Canada Revenue Agency such information on reportable sellers by January 31 of the year following the calendar year for which a seller is identified as a reportable seller. Reporting platform operators would also be required to provide the information relating to each reportable seller to that seller by the same date.

There is an anti-avoidance rule which provides that where a person enters into an arrangement or engages in a practice, the primary purpose of which is to avoid an obligation under new Part XX, the person is subject to the obligation as if the person had not entered into the arrangement or engaged in the practice.

Written by: Kevin Yip and Puyang Zhao

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Analysis, Canada

Proposed Tax Measures to Stabilize the Economy During COVID-19 (Canada)

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On March 18, 2020, the Canadian government announced economic measures to help stabilize the Canadian economy in response to the COVID-19 pandemic. These measures are intended to provide up to $27 billion in direct support to Canadian workers and businesses. This newsflash will provide a brief summary of the key tax measures that were included with this announcement. Similar measures were announced on March 17, 2020 by the Quebec government. Fasken commentary on the Quebec measures can also be found on our website.

Tax Return Filing Deadlines

With 2019 tax return filing deadlines approaching, the Canada Revenue Agency (“CRA”) will defer the filing due date for the 2019 tax returns of individuals, including certain trusts. For certain individuals (other than trusts), the return filing due date will be deferred from April 30 until June 1, 2020. Self-employed individuals (and their spouses) are unaffected by these measures as the filing due date for 2019 tax returns remains June 15, 2020.

For trusts having a taxation year ending on December 31, 2019, the return filing due date will be extended from March 30, 2020 to May 1, 2020.

Upcoming Income Tax Liabilities

CRA will permit all taxpayers (including businesses) to defer, until after August 31, 2020, the payment of any amounts on account their income tax liabilities that become owing on or after March 18, 2020 and before September, 2020. This relief applies to income tax balances due, as well as instalments on account of such taxes. CRA will not charge interest or penalties on these amounts during this period.

It should be noted that the timing of payment of other Canadian taxes including GST/HST, payroll taxes and non-resident withholding taxes are not deferred.

Suspension of Audit Activity

CRA will not contact any small or medium businesses to initiate any post assessment GST/HST or income tax audits for the next four weeks (ending April 15, 2020) and the CRA will temporarily suspend audit interaction with taxpayers and representatives for the “vast majority of businesses”.

Other Tax Proposals

Unlike the administrative relief described above, some of the measures announced require Parliamentary approval. The Canadian government has proposed to provide a special payment by early May 2020 through the Goods and Services Tax credit (“GSTC”). The proposal is to double the maximum annual GSTC payment amounts for the 2019-20 benefit year. The Minister of Finance (Canada) estimates that the average increase to income for those benefiting from this measure will be approximately $400 for single individuals and nearly $600 for couples.

The Canadian government is also proposing to increase the maximum annual Canada Child Benefit (“CCB”) payment amounts for the 2019-20 benefit year by $300 per child.

Finally, these measures contain a proposal to provide “eligible small employers” a wage subsidy for a period of three months. The announcement states that eligible small employers will include corporations eligible for the small business deduction, as well as non-profit organizations and charities but provides no further specifics. The proposed subsidy is to be equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. The announcement does not stipulate when the three month period will begin but provides that eligible businesses will be able to deduct the amount of such subsidy from the income tax withholdings that they would otherwise remit in respect of their employees’ remuneration.

Canada’s prime minister indicated that all of the major political parties in Parliament support these measures and will likely reconvene Parliament to approve them in the coming days.

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Analysis, British Columbia, Canada

British Columbia introduces an Employer Health Tax in 2019


BC’s, employers should become familiar with the new EHT rules so as to determine whether registration is required, and if so, whether early registration is required before May 15, 2019.

British Columbia has decided to implement an Employer Health Tax (“EHT”), effective January 1, 2019. The EHT is a payroll tax, calculated on gross employment income, that employers in British Columbia will need to self–assess and remit. For all employers that will be required to pay instalments during 2019, the deadline for registration for this new tax is May 15, 2019. For all other employers that will be subject to the tax, registration will not be required until the end of December 2019. Determining whether instalments will need to be paid requires an exercise in determining how much EHT would have been due in 2018 if the EHT had already been implemented. For any employer who would have owed more than $2,925 in EHT, instalment payments for 2019 will be required.


At its core, the EHT – similar to the one imposed in Ontario – can be a fairly simple tax to deal with in many circumstances, particularly for companies with employees that report for daily work at a location in British Columbia. However, for companies with employees that report for work in multiple provinces, or that get paid from offices outside of British Columbia, or for non–Canadian companies that send employees into British Columbia (among many other potential scenarios), the rules can be much more challenging to apply, and can potentially lead to circumstances of double taxation or assessments for failure to properly report and pay the EHT.


The general rules indicate that employers with total annual payroll in British Columbia of $500,000 or greater will be liable to report and pay EHT, with an increased threshold for charities and non-profits, for whom EHT is not payable until their total annual British Columbia payroll reaches $1,500,000 (with certain other special rules for potential exemptions). However, determining whether you have any payroll amounts in British Columbia, and if so, whether you have crossed these monetary thresholds, can often be a more complicated matter, particularly for entities with related parties that may carry on some business in British Columbia or those that send employees into British Columbia for parts of the year.


At this time, we would advise all businesses that have employees working in British Columbia, whether full–time, part–time or even temporarily, to become familiar with the new EHT rules so as to determine whether registration is required, and if so, whether early registration is required before May 15, 2019. We would be pleased to assist with any questions that arise in trying to determine whether compliance will be required.

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Analysis, Canada

Canada Life: The Denial of Rescission is a Troubling Decision for Taxpayers and Professional Advisors

On June 21, 2018, the Ontario Court of Appeal handed down a decision in the case of Canada Life Insurance Company of Canada v. the Attorney General of Canada and Her Majesty the Queen in the Right of Ontario. This is a very troubling decision for taxpayers and their professional advisors. The facts are briefly as follows. The Canada Life Insurance Company of Canada (“CLICC”) and certain of its affiliates carried out a series of transactions and events in December 2007. The purpose of the transactions was to realize a tax loss to offset unrealized foreign exchange gains accrued in the same taxation year. The Canada Revenue Agency (the “CRA”) disallowed the claimed loss in the reassessment of CLICC’s taxes for 2007. Asserting that it had proceeded on the basis of erroneous advice from its tax advisor, CLICC applied to the courts for an order setting aside the transactions and replacing them with other steps retroactive to the date of the original transaction.

The problem arose because the tax loss was to be triggered by the winding up of a limited partnership. The mistake was that the general partner of the limited partnership, CLICC GP, was also wound up at the same time that the partnership was wound up. This resulted in the limited partner, CLICC, carrying on the business of the limited partnership alone within three months of the dissolution of the partnership.

CLICC originally applied for an order rectifying the transaction so as to move the winding-up of the general partnership from December 31, 2007 to April 30, 2008. The taxpayer was successful in its application before the application judge. However, the Attorney General appealed the decision. While the appeal was pending, the Supreme Court of Canada, in the case of the Fairmont Hotels,[1] overruled previous decisions which permitted rectification. The change in law restricted the scope of the equitable remedy of rectification to the correction of written agreements. Continue reading »Facebooktwitterlinkedinmail

Analysis, Canada, Cross-border (Canada/US)

MLI Implementation in Canada

new-york-690868_1920On May 28, 2018, nearly a year after Canada became a signatory to the OECD’s Multilateral Instrument (“MLI”), a notice of ways & means motion has been tabled by the Minister of Finance (Canada) in the House of Commons signalling the Canadian government’s intention to introduce legislation to ratify the MLI.  On June 20, 2018, Bill C-82, which will enact the MLI, received first reading in the House of Commons. The MLI has been signed by 78 countries including Canada.

When the MLI is ratified by Canada and the other signatories, existing bilateral tax treaties may be modified to apply certain agreed to minimum standards  on treaty abuse and improving dispute resolution that were endorsed by participating countries under the OECD /G20 Base Erosion and Profit Shifting (BEPS) Project.

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