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Canada

9 May 2019

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Canadian Government Response to Auditor General Report on the Taxation of E-Commerce

The Canada Revenue Agency (CRA) has issued the government's statement in response to the report from the Auditor General on the taxation of e-commerce. The report includes the following two recommendations for the CRA, which the CRA has agreed to:

Recommendation. Within its legislative authority, the Canada Revenue Agency should expand its compliance activities and leverage available third-party data to enhance its ability to detect and deter non-compliance for the GST/HST in e-commerce, including accommodation sharing.

Recommendation. The Canada Revenue Agency should implement mechanisms to track, monitor, and report the number of compliance activities it conducts to manage the risk of non-compliance in e-commerce.

The report also includes the following recommendation for the Canada Border Services Agency (CBSA), which the CBSA has agreed to:

Recommendation. As soon as possible, the Canada Border Services Agency should review the Courier Low Value Shipment Program to improve the validation and collection of the GST, the HST, and the PST. As part of the review, the Agency should

  • identify the program variables that should be fully reflected in the Agency’s systems and forms, such as provincial sales taxes;
  • ensure that it receives shipment data electronically in advance of the goods arriving at the border to facilitate compliance activities; and
  • implement a comprehensive e-commerce strategy to make informed risk assessments and improved revenue collection, and report publicly on its progress.

The government's statement is as follows.

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Government of Canada’s statement in response to Auditor General of Canada report on the Taxation of E-Commerce

Following the tabling of the 2019 Spring Reports of the Auditor General of Canada, the Honourable Diane Lebouthillier, Minister of National Revenue, and the Honourable Ralph Goodale, Minister of Public Safety and Emergency Preparedness, issued the following statement in response to Report 3 entitled "Taxation of E-Commerce," which included two recommendations for the Canada Revenue Agency (CRA) and one recommendation for the Canada Border Services Agency (CBSA):

"Online shopping is now a mainstay for Canadians, as well as Canadian businesses of all sizes. We have seen the retail landscape transform as more people make purchases online.

As we continue to examine what the growth in e-commerce means for our tax system, we welcome the views of the interim Auditor General with regard to the taxation of e-commerce. We thank him and his team for their work and accept the recommendations.

As noted in the Report, the CRA has already identified e-commerce as posing a risk to compliance. The CRA has taken appropriate first steps, within its authority, to address it. This includes educating taxpayers of their GST/HST obligations and conducting test audits.

Canadians can be assured that the CRA’s compliance efforts in e-commerce have reflected, and will continue to reflect, the scale of risk e-commerce poses to tax revenues.

Canadians currently benefit from having their low-value, courier shipments cross the border faster thanks to streamlined processes for qualified courier companies. The CBSA is continuously making efforts to modernize the customs processes to meet the increasing volume of e-commerce."

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