28 May 2025 IFA Roundtable Q. 1, 2025-1052641C6 - Digital Services Tax (DST) Act

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: Updates on various CRA administrative procedures concerning the Digital Services Tax (DST) Act.

Position: See discussions below.

Reasons: See discussions below.

IFA 2025 Annual Conference - CRA Roundtable

Question #1 - Digital Services Tax (DST) Act (Footnote 1)

Canada’s new Digital Services Tax (DST) Act received Royal Assent on June 20, 2024 in Bill C-59 and came into force as of June 28, 2024. DST is a 3% tax that applies to in-scope revenue that exceeds a group’s first $20 million of in-scope revenue for a given year, provided they meet certain thresholds. DST applies annually starting in 2024 with retrospective application to the 2022 calendar year. The most recent deadline that passed was the requirement for certain entities to register for DST with the CRA by January 31, 2025, while the first actual filing of the returns and remittance of tax for the 2024 year (as well as the retrospective years 2022 and 2023) is due June 30, 2025. Can the CRA shed some light on the following administrative uncertainties concerning the DST?

1. Will the CRA release a schedule to facilitate the DST filing or will the filing be via an XML schema similar to the Digital Platform Rules?

2. Will taxpayers need to submit three separate filings for the June 30, 2025 filing deadline to account for the filing of the 2022, 2023 and 2024 returns, or will there be a special first year of application submission?

3. Given the recent update by the Co-chairs of the Inclusive Framework released January 13, 2025, including reporting on the progress of a final Pillar One package, is the CRA prepared for cancellation of the existing filing requirements and adoption of Pillar One starting as early as 2025?

4. Will the CRA release a new form to allow for the election for a simplified Canadian digital service revenues calculation for 2022 and 2023 under subsection 12(2) of the DST Act?

5. Will the CRA release a new form to allow the filing of a Notice of Objection as permitted under section 72 of the DST Act?

6. Will the CRA release a new form to allow for refunds of payments in error under section 60 of the DST Act?

CRA Response

Sub-question 1:

Filing of DST returns is done through the CRA's Application Programming Interface (API) using a JSON schema. Before filing a DST return for the first time, taxpayers need to undergo a certification process. Since early April 2025, instructions to facilitate certification and filing, as well as the filing schema, have been provided to taxpayers by email as part of the certification process. Information about the DST filing has also been available on Canada.ca since early April 2025.

Sub-question 2:

Taxpayers are required to submit only one filing that covers calendar years 2022 to 2024.

Sub-question 3:

In accordance with the existing DST legislation in Canada, the first DST payment/filing deadline is set for June 30, 2025. In the event the Multilateral Convention to implement Pillar One, Amount A, is adopted by the Inclusive Framework on BEPS (IF), it will require national DSTs of participating IF jurisdictions to be removed.

The CRA, as the administrator of the Canadian DST, will be prepared to adjust filing and compliance requirements accordingly should the government decide to transition from DST to Pillar One, Amount A. The CRA is closely monitoring developments at the OECD in connection with Pillar One, Amount A. Taxpayers remain subject to DST compliance requirements until further Canadian legislative action is taken. The CRA will issue guidance as the situation evolves.

Sub-question 4:

Taxpayers electing to use the simplified method for calculating Canadian digital services revenue for 2022 and/or 2023 must indicate the election directly in the DST filing schema for 2024. The schema will include a field for the simplified method election. In other words, there is no need for a separate form nor for a letter attached to the schema to elect to use the simplified method.

Sub-question 5:

The CRA will release a new form to allow the filing of a Notice of Objection as permitted under section 72 of the DST Act. The DST objection form is expected to be made available before the first assessments are issued for DST returns due by June 30, 2025.

Sub-question 6:

There is no form required for refunds of payments made in error on DST accounts. The CRA will review all requests for these refunds received through the Business Enquiries line, My Business Account, or by correspondence from an authorized owner/representative.

Vicky Liu
2025-105264
May 28, 2025

Response prepared by:

Renée Desrosiers/Linda Hansen (sub-questions 1, 2, 4)
International Tax Operations Division
International and Large Business Directorate
Compliance Programs Branch

Ann Kippen/James Atkinson (sub-question 3)
Specialty Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
(Response prepared in collaboration with the Compliance Programs Branch)

Walter Woo/Ziye Zhang (sub-question 5)
Taxes & Charities Appeals Directorate
Appeals Branch

June Carrière (sub-question 6)
Business Accounting Programs Section
Assessment, Benefit, and Service Branch

FOOTNOTES

Note to reader: Because of our system requirements, the footnotes contained in the original document are shown below instead:

1. On June 29, 2025, the Government announced its intention to rescind the Digital Services Tax Act. As a result, the CRA has deferred the requirement to file a DST return by June 30, 2025, under the current provisions of the Digital Services Tax Act. Accordingly, the CRA will not require businesses to file a DST return or remit any DST-related amounts