Compliance in the digital age: A guide for Canadian DPOs

Discover how Canada’s regulations are reshaping the digital marketplace for platform operators. In this episode, Craig Mulcahy, Bruce Goudy, and Michelle Minor break down the specifics of the new rules, their impact on operations, and the crucial compliance deadlines. Gain insights on strategies for compliance, the consequences of non-compliance, and the importance of data management. This is a must-listen for digital platform operators looking to succeed in a regulated digital world. 

Guest information:

Host: Craig Mulcahy, Partner, SR&ED and Government Incentives Leader

Guests:

Bruce Goudy, Director, Indirect Tax

Michelle Minor, Senior Manager, Indirect Tax

 

What you’ll hear in this episode: 

[0:23] Intro

[2:20] What is a digital platform operator (DPO)?

[2:55] Current compliance requirements

[5:01] Overview of current rules for DPOs

[7:12] Quebec’s new rules for DPOs

[7:50] DPO Registration rules in other provinces

[10:42] How can DPOs ensure compliance?

[12:02] What kind of documentation is required?

[13:50] Planning opportunities for DPOs

[16:34] Brief summary of the key messages

 

Quotes 

“The first thing is knowing what registrations you need. You need to know your threshold for each jurisdiction and monitor your sales every month. And you also need to know what information you need to gather to support either not having to register or if you do have to register, not having to collect the tax.”

“A digital platform operator or a DPO as they're referred to, are businesses that offer an online marketplace that allows sellers to offer their products online for sale to buyers. Products can range widely from various streaming services, which many of us are familiar with, software, and goods that actually get delivered to your door.”

“We've gone from a landscape where non-resident DPOs had little, if any, sales tax compliance in Canada and the provinces, and now they have to register to collect and remit up to five different sales taxes each with their own unique rule.”

“The DPOs will also need to collect information for all transactions facilitated through their platforms for not only filing purposes, but also to report on their information returns. That's a lot of information for DPOs to collect, and it's a requirement that they might not have had before.”

“DPOs with customers in Canada could have up to about eight different filings each year or different types of filings each year due to these new rules.”

“Digital platform operators now face significant compliance burdens needing to register for, collect up to five different sales taxes in Canada. There's filing information returns requirements, and potentially dealing with a new 3% digital services tax.”

“With Quebec's regulations, aligning closely with federal rules while BC, Manitoba, and Saskatchewan have their own thresholds and requirements.”

“DPOs must collect a ton of detailed information from sellers and buyers to determine their tax obligations and ensure compliance with the new rules.”

“Penalties. They can be hefty, but there are ways for DPOs to mitigate and eliminate their exposure if they find they’re offside.”