Let me say right up front that (a) I’m not an accountant, tax lawyer or employee of the CRA; and (b) confused. If any cares to set me straight on what follows, please do.
There’s been much talk lately of something called a “Netflix tax.” If you have a subscription to Netflix, you probably have noticed that it shows up on your credit card as a charge for $7.99. And like all goods and services purchased in this country, that includes GST or HST. Right?
Actually, it doesn’t. Because Netflix doesn’t have any employees, offices or assets in Canada, they say that they’re not required to register for PST/GST/HST nor do they have to charge those taxes to their customers. That’s their official position.
Great! So our Netflix subscriptions are tax-free, right? Um, no. There’s a technicality.
According to CRA rules, if a foreign business doesn’t charge sales tax, the responsibility falls on the Canadian taxpayer to keep track of their foreign purchases and then self-assess the taxes to be paid, which then must be reported and paid to the government. This applies to all Canadians who buy taxable goods and services online. That means your “tax-free” Netflix subscription should actually cost $9.03 ($7.99 + 1.04 HST) in places like Ontario. Ugh.
Okay, so maybe Netflix can slide by not having a physical presence in Canada. But what about Amazon? A lot of people buy Kindle books through Amazon.com, upon which no tax is charged. Don’t they have assets (employees, offices, etc.) in Canada? If so, shouldn’t those purchases be automatically taxed?
Which brings me to iTunes. When you buy a track for 99 cents or $1.29, none of that is tax. And Apple sure as hell has employees, offices and assets in Canada.
Uh-oh. Did I just poke a bear?