#nonetflixtax

The Taxman Cometh

The Canadian government is again considering a digital services tax on foreign services like Google Play, Netflix, Prime Video and Spotify, whose operations are not based in Canada.

Unlike Cineplex and Apple/iTunes, these companies are not compelled by law to collect taxes on their services because they have no physical presence in the country, no Canadian subsidiary, and simply broadcast services to Canada.

The CRTC had ruled against a Netflix Tax in March 2015 and in June 2018 the federal government had passed on implementing the tax. But the provincial governments of Quebec and Saskatchewan have collected provincial sales tax on these services since January 2019 and British Columbia followed suit in July 2020, setting a precedent that could ease the introduction of a federal tax.

Monthly subscriptions could get costly for some but I suspect these services will continue offering incentives and promotions to keep their clientele.

Discounts and bonus rewards are usually offered on gift card purchases throughout the year, some of which are considerable.

For example, Shoppers Optimum points users will get 7500 points when they purchase $50 iTunes cards from select Shoppers Drug Mart stores until December 11th, 2020. And the same offer will be made available to some users who purchase $50 iTunes gift cards at select Real Canadian Superstore locations from December 10th to December 16th, 2020.

I occasionally encounter similar offers for discounts and bonus points for Google Play, Netflix and Spotify gift cards. And in regards to Prime Video and Prime Music, these services are made available free to Amazon Prime members.

Apple TV is also offered free for a year on new Apple product purchases so some relief can be had on some digital purchases and subscriptions. But I don’t think the tax will be implemented for some time.

The provinces that have yet to implement a provincial sales tax on these services will likely wish to discuss the possibility of a Harmonized Sales Tax so I suspect our foreign digital services won’t be taxed until July 1st, 2021 or January 1st, 2022.

Update – Response on Netflix/Internet Tax

From my local Member of Parliament, Karen McCrimmon (Dated June 13th, 2018) :

“Hello Rob,

Thank you for taking the time to share your ideas with me.

Our government understands the importance of supporting our artists and creators. We also know that the way Canadians access content is changing. That’s why we have made historic investments of $3.2 billion, to support our artists and creators. It’s also why we will be modernizing our laws and programs to better support our artists in the digital era.

Netflix’s investment is a part of the transition. It secures 5 years of investments for our creators, as we modernize our laws and programs.

We, as a government have decided not to introduce a Netflix tax because we don’t want to raises taxes on the middle class, we want to lower them. We will always look at ways to strike the balance between a fair tax system and the investments we need in our culture, but in doing so, we’re not going to be raising taxes on the middle class through an internet broadband tax.

I will share your ideas with my fellow colleagues, including the Minister of Finance, Bill Morneau.

Thank your again for your engagement as a constituent.

Kind regards,

Karen”

I had suggested that if taxes on streaming services are absolutely necessary that they consider forwarding a portion of the federal taxes collected from these services to Canadian Content initiatives, instead of introducing an independent levy for that purpose.

As i’ve mentioned in a previous entry, these services will be taxed on New Years Day in Quebec and the Canadian Radio & Telecommunication Commission had made a proposal of their on in regards to levy to fund Canadian Content.

The publics views have been made clear by a February 2017 poll conducted by Innovative Research Group earlier in 2017. But I had thought to send my opinion and suggestions to my local MP and Heritage Minister Melanie Joly in response to the CRTC’s recent proposal.

If you wish to contact your local Member of Parliament on this issue, you can do so via the MP database by clicking here.

I will of course update this blog if the situation changes.

Thank you.

What Netflix Tax ?

It should be noted that the CRTC ruled against a “Netflix tax” in March 2015, as stipulated in a March 12th, 2015 thestar.com article. And that all of the major parties have categorically denied wanting such a tax.

Apparently the only major proponent of this tax was the provincial government of Ontario. But they have since changed their minds according to University of Ottawa Law professor and internet columnist Michael Geist. His March 10th, 2015 blog entry on this issue can be found by clicking here.