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.
