Understanding the New Reporting Rules for Digital Platform Operators in Canada

The Canada Revenue Agency (CRA) has published detailed guidance, and technical information on their new reporting requirements for Digital Platform Operators. The rules are aimed at enhancing transparency and compliance within the sharing, freelance and gig economy landscape. These requirements, known as the “Reporting Rules for Digital Platform Operators”, necessitate that operators of digital platforms collect and report detailed information on certain sellers to the CRA. The rules are essentially Canada’s version of the EU’s DAC7 rules for those familiar.

Timeline

Affected businesses need to submit their reports by January 31, 2025

Who Qualifies as a Reporting Platform Operator?

A reporting platform operator is defined as a platform operator that either resides in Canada or operates out of another jurisdiction but facilitates the sale of goods or services, including property rentals, within Canada. However, operators whose business models do not enable sellers to profit or do not involve reportable sellers are exempt from these reporting obligations.

Identifying a Reportable Seller

A reportable seller is typically someone who:

- Is registered with a digital platform.

- Resides in Canada or in a country that adheres to these reporting standards.

- Engages in selling goods or offering services, including property rentals, to customers in Canada or in participating countries.

Platforms often have specific names that they use internally like: Partners, Creators, Drivers, Guides, Hosts, Home or Property Owners, Restaurants, Couriers, etc.

Reporting Requirements: What Needs to be Reported to the CRA?

Reporting platform operators are tasked with reporting both identification and activity information for each reportable seller. This includes:

• Identification Information: Name, primary address, date of birth (where applicable), tax identification number (and issuing jurisdiction), and financial account identifiers.
• Activity Information: Payments made or credited, any fees, commissions, or taxes withheld or charged, and the location of rented property (if applicable).

These data points are collectively referred to as reportable elements.

Due Diligence Procedures

To ensure the accuracy of the reported information by December 31 of the reportable period, reporting platform operators must adhere to specific due diligence procedures. This includes verifying the reliability of information related to seller information like the tax IDs, and the address of listed properties. Note that there is a transitional period for the first year of being a reporting platform operator.

Filing Instructions

The inaugural information return for the calendar year 2024 is due by January 31, 2025, with the same deadline applying for subsequent years. Reporting platform operators must register for a business number and an information returns RZ program account for filing purposes.

The return should be filed using an XML Schema, with the process varying depending on the operator's residency.

Sources

You can find all technical information and guidance around the CRA’s new Digital Platform reporting requirements on the CRA’s dedicated webpage.

How can Fonoa help?

By January 31, 2025, the reports will have to be submitted to the CRA. Platforms will need to start collecting all required data points from their sellers.

With our tax number validator, you can validate tax IDs from Canada and 110+ countries in bulk and individually and return necessary information from local databases like name and address.

Our Data Sharing product will guide tax professionals towards compliance with the new reporting requirements and automate technical complexities so you can save time while owning and controlling the end-to-end process. No need to share your data outside your organization or asking software engineers to help you build the necessary code.

Our Data Sharing product comes with a proven track record of helping industry leading Digital Platforms comply with similar rules in other jurisdictions like the EU’s DAC7.

Put your time and energy back into your business, not tax compliance!

Get in touch to automate these data reporting processes.‍