25 January 2024 External T.I. 2023-0990781E5 - Part XX and business registration number

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Does Canada issue business registration numbers to Canadian resident entities that are sellers for the purpose of Part XX of the Act?

Position: No.

Reasons: Canadian entities can be incorporated federally or under the laws of a province or territory. They are usually required to register in any province or territory in which they are carrying on business. Paragraph 284(4)(a) exempts reporting platform operators from collecting the TIN and the business registration number where the jurisdiction of residence of the seller does not issue such a number. The word "jurisdiction" in Part XX is a reference to a country as a whole. Canada, as a jurisdiction, does not issue business registration numbers to entities.

XXXXXXXXXX									2023-099078
										Pierre Girard

January 25, 2024

Dear XXXXXXXXXX:

Re: TIN and Business Registration Number for the purposes of Part XX

Unless stated otherwise, all statutory references in this document are to the Income Tax Act (Canada), R.S.C. 1985, c.1 (5th Supp.) (the “Act”), as amended to the date hereof.

We are writing in reply to your inquiry of August 29, 2023 in which you requested guidance on the requirement of reporting platform operators to collect a “business registration number” in respect of each Canadian resident entity seller pursuant to subsection 284(2).

You shared your views that paragraph 284(4)(a) exempts reporting platform operators from having to collect a business registration number in respect of Canadian resident entity sellers on the basis that Canada does not issue such a number.

Our comments

As a result of the significant growth of the digital economy, the Organisation for Economic Co-Operation and Development (“OECD”) developed Model Rules to collect information on transactions and income earned through digital platforms and to facilitate the exchange of information between tax administrations.

The Act to implement certain provisions of the budget tabled in Parliament on March 28, 2023 (“Bill C-47”) added a number of provisions designed to implement the OECD Model Rules. Bill C-47 received royal assent on June 22, 2023. Effective January 1, 2024, these rules are now provided for in Part XX of the Act, under sections 282 to 295.

As is the case for the OECD Model Rules, Part XX is structured around three axes: (i) the collection of information, (ii) the due-diligence procedures in respect of the information collected and (iii) the reporting obligations for reporting platform operators (“RPOs”).

From a general standpoint, Part XX imposes new requirements on RPOs. For the purposes of Part XX, platform operators will qualify as RPOs if they are resident in Canada. Non-resident platform operators may also qualify as RPOs if, among other things, they facilitate the provision of relevant services or the sale of goods for consideration by Canadian sellers.

RPOs are first required by section 284 to collect certain pieces of information for each user that is registered on their platform for the provision of a relevant service or the sale of goods. This requirement allows the CRA to properly identify the seller.

In addition, with the information collected from its sellers, RPOs are required to complete due diligence procedures in respect of this information. More precisely, pursuant to subsection 285(1), RPOs must determine whether the information collected is reliable, using all records available to the reporting platform operator, as well as any publicly available electronic interface to ascertain the validity of the taxpayer identification number provided by the seller.

Finally, pursuant to subsection 291(1), RPOs must report to the Minister the information set out in section 292 no later than January 31 of the year following the calendar year in which the seller is identified as a “reportable seller”.

Turning back to the collection of information, subsection 284(2) indicates the RPO is required to collect all the following in respect of a seller (other than an excluded seller) that is an entity:

(a) the legal name;

(b) the primary address;

(c) the taxpayer identification number and the jurisdiction of issuance; and

(d) the business registration number

Your inquiry involves a Canadian resident entity seller. In such a case, paragraph 282(1)(a) defines the TIN as the number used by the Minister to identify an individual or entity, including a business number. To the same extent, subsection 248(1) defines “business number” as the number used by the Minister to identify a corporation. In Canada, the business number (“BN”) is a nine digit number that is assigned to businesses and other organizations for tax-related purposes.

However, the term “business registration number” (“BRN”) is not defined in the Act. According to subsection 282(2), Part XX is to be interpreted consistently with the OECD Model Rules. Paragraph 60 in Section 1 of the Model Rules offer the following guidance:

“60. Jurisdictions that do not issue TINs often use some other high integrity number with an equivalent level of identification (a “functional equivalent”). Examples of that type of number include, for individuals, a social security/insurance number, citizen/personal identification/service code/number, and resident registration number. For Entities this can be a business/company registration code/number, provided that such number is indeed used as a TIN in the jurisdiction of (tax) residence of the Entity”. (emphasis added)

As previously mentioned, Canada will issue TINs to Canadian resident entities. While Canadian resident entities usually have to register in the province or territory in which they carry on business, it is the province or territory that assigns a BRN to these entities, not Canada. Therefore, we are of the view that Canada, as a jurisdiction for the purposes of Part XX, does not issue BRNs to Canadian resident entities.

For the above reasons, we agree with your view that in the case of a Canadian resident entity seller, paragraph 284(4)(a) would exempt the RPO from having to collect that number.

However, we would mention that the definition of TIN together with the requirements in subsection 284(2) acknowledges there might be situations where, for example, another jurisdiction could issue both a TIN and a BRN to an entity, in which case RPOs would be required to collect both numbers.

We trust these comments will be of assistance.

Yours truly,

Gillian Godson
Manager, Administrative Law Section I
Specialty Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch