The Digital Services Tax Canada (DST) is a 3% tax on revenue earned by large businesses that provide certain digital services involving Canadian users. This includes revenue from online marketplaces, advertising, social media platforms, and user data monetization. Introduced under the Digital Services Tax Act (DSTA), the DST ensures that multinational corporations contribute a fair share of taxes when profiting from Canadian user engagement.

Who Is Subject to the Digital Services Tax Canada?

A business—domestic or foreign—is subject to the Digital Services Tax Canada if all of the following criteria are met:

  • Global Revenue: The business (or its consolidated group) earns €750 million or more globally in the prior fiscal year. 
  • Canadian Digital Services Revenue: The business earns more than CAD $20 million in Canadian-sourced digital services revenue during the calendar year. 

Even if Canadian digital services revenue exceeds CAD $10 million (but not $20 million), the business must register and file a return, although no tax is payable.

What Revenue Is Taxed Under the Digital Services Tax Canada?

The 3% DST is calculated on Canadian digital services revenue exceeding CAD $20 million. This includes revenue from:

  • Online marketplace services
  • Online advertising services
  • Social media services
  • User data monetization

Some exclusions apply, particularly for revenue where the taxpayer sells their own inventory on an online marketplace.

How Is the Digital Services Tax Canada Calculated?

Revenue is sourced using user location data, which helps determine which revenue is attributable to Canadian users. For retroactive years (2022 and 2023), businesses may elect to use a simplified formula provided by the CRA.

Registration Requirements for the Digital Services Tax Canada

Businesses meeting the thresholds must register for a DST program account by January 31, 2025, if they:

  • Had any Canadian digital services revenue in 2022, 2023, or 2024.
  • Belonged to a consolidated group with €750 million+ in total global revenue during the relevant year.
  • Belonged to a consolidated group with Canadian digital services revenue over CAD $10 million in any of those years. 

To register, businesses must use the CRA’s DST account registration form, providing:

  • Legal and incorporation details
  • Contact information for directors or officers
  • CRA Business Number (BN), if applicable 

Once submitted, the CRA issues a confirmation number and may request additional documents, such as incorporation certificates.

Filing and Payment Deadlines for the Digital Services Tax Canada

  • DST Return Filing: Due June 30, 2025, for the 2024 calendar year.
  • DST Payment: Also due by June 30, 2025, via wire transfer to the CRA in Canadian dollars. 

There is no paper filing option. All returns must be filed electronically using an API in JSON format.

Designated Entity Election Under the Digital Services Tax Canada

A business can designate another entity within its consolidated group to file the DST return on its behalf. To do this:

  • The designated entity must be registered and have a DST program account.
  • The election must be made jointly and documented, though there is no formal CRA form.
  • CRA may request to see a copy of the election and supporting documents.

Consequences of Non-Compliance with the Digital Services Tax Canada

Failing to file or pay DST on time may result in penalties and interest, which accrue daily based on CRA-prescribed interest rates. Keeping detailed records and filing accurately is essential.

What Information Is Needed to File the Digital Services Tax Canada Return?

Businesses must prepare:

  • Their DST program account number
  • Primary contact info
  • Revenue breakdown (marketplace, ads, social media, user data, etc.)
  • Any elections made for simplified calculation methods 

To use the simplified method for 2022 or 2023, businesses must opt in and provide total annual revenues for those years.

How to Make DST Payments

DST payments must be made via wire transfer to the CRA through Scotiabank. Payment details include:

  • CRA beneficiary name and account number
  • Authorization number
  • CRA business number and DST account
  • Contact name and payment date

Be sure to account for bank fees separately to avoid underpayment.