Beginning this year, digital platform operators should be aware of the new tax reporting requirements under section 292 of the Income Tax Act (“ITA”).  Many reportable digital platforms (including many online “gig” platforms) will now be required to file reports with the CRA providing information about the activities of their “reportable sellers”.  Filings for the 2024 year are due by January 31, 2025!

Which Platform Operators are Affected?

The new requirements target a subset of “platform operators”, which under section 282 of the ITA include websites or applications that contract with sellers to use all or part of a platform to connect with customers. 

Specifically, the targeted “reportable platform operators” (“RPOs”) include those which are either:

1. resident in Canada;
2. resident, incorporated, or managed in a partner jurisdiction (e.g., the UK), facilitate the provision of relevant activities by sellers resident in Canada or with respect to rental of immovable property located in Canada and elects to be a reporting platform operator;
3. not resident in Canada or a partner jurisdiction but allow Canadian resident sellers to partake in the rent of real or immovable property in Canada.

In this context, “relevant activities“ involve the platform enabling the sale of goods for consideration or providing a “relevant service” (i.e., the rental of real or immovable property, personal services, vehicles for hire, and prescribed services, in exchange for consideration).

That said, certain platform operators may be “excluded platform operators” where they can demonstrate that their platform does not allow sellers to derive a profit, or has no reportable sellers.

Whose Information Must Be Reported?

RPOs must (in many cases) report information in relation to their “reportable sellers”.  According to section 282 of the ITA, an active seller (other than an excluded seller) becomes a reportable seller if the platform operator determines (based on the due diligence obligations set out in sections 283 through 287) they are either:

1. resident in a reportable jurisdiction;
2. have provided relevant services for the rental of immovable property located in a reportable jurisdiction;
3. have been paid or credited consideration in connection with relevant services for the rental of immovable property located in a reportable jurisdiction.

What is Reported to CRA?

RPOs must collect and report information about reportable sellers to the CRA including their legal names, primary addresses, activity information (i.e., earnings), taxpayer identification numbers (TIN), financial account identifiers, dates of birth (if applicable), and seller’s business names and registration numbers (if applicable).  A copy of the information provided to CRA must also be provided to each reportable seller to which it relates.

Moreover, RPOs are also required to fulfill certain due diligence obligations set out in sections 283 through 287 of the ITA.

Takeaways

As the CRA turns to enforcing the new reporting requirements, RPOs should review what is asked of them and be mindful of deadlines.

The CRA’s reporting requirements do not make it clear what is to be done for platforms, like Airbnb, that already collect tax and inform the CRA.  RPOs should seek out legal assistance to ensure they understand all applicable reporting obligations.

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