Principal Issues: Whether revenue earned by a taxpayer from facilitating the online booking of various domestic and international airplane flights is included in the taxpayer's Canadian online marketplace services revenue for purposes of the digital services tax (DST).
Position: 1) Yes for revenue in respect of a flight that both departs from and lands in Canada. 2) Yes for revenue in respect of a flight that either departs from Canada or lands in Canada. 3) No for revenue in respect of a flight that departs from one foreign country and lands either in that country or in another foreign country.
Reasons: In assessing whether a service is "physically performed and received" in Canada or in the same country for purposes of Variables A and B of the s. 14 determination of Canadian online marketplace services revenue, it is a point in time test. The legislation is intended to capture online marketplace services revenue in respect of the physical delivery of a service that has a direct physical impact in Canada. Therefore, the service must be both physically performed in and physically received in Canada at a point in time for purposes of Variable A, or in the same country for purposes of the exclusion in Variable B, at any particular point in time during the performance of the service.
