Canadian Laws for Non-Resident Vendors of Digital Products and Services, Users of Fulfillment Warehouses, and Short-Term Rentals Come into Effect

On July 1, 2021, three new measures created under Bill C-30 came into effect requiring non-resident businesses to begin collecting GST/HST on sales of digital goods and sales made through digital platforms.

The measures affect three groups of non-resident businesses making sales to Canadian customers, requiring each to register for and begin collecting GST/HST on sales made into Canada:

• Vendors and platform operators making sales of taxable digital products and services.
• Vendors and platform operators selling short-term accommodations.
• Vendors and platform operators storing a supply of taxable tangible personal property in Canada for the fulfillment of online sales to Canadian customers.

The Canada Revenue Agency has indicated that they intend to work with foreign businesses over a 12-month transition period to bring these vendors into compliance. Non-Canadian internet vendors should evaluate their own presence and the nature of their sales into Canada to understand if and to what extent these new registration and collection requirements may affect their compliance with Canadian law going forward. (Bill C-30, Canada Revenue Agency “GST/HST for digital economy businesses: Overview”)