British Columbia

What the new 'Netflix tax' means for B.C. users

The government will be collecting the provincial sales tax of seven per cent from a greater number of businesses in the digital economy, according to the fiscal plan.

The new tax could cost users an additional $11.76 per year

Starting in July, the B.C. government will begin applying a seven per cent sales tax on Netflix streaming services. (Craig Chivers/CBC)

The B.C. government announced its 2020 budget Tuesday and with it came some new taxes, including one on streaming services like Netflix. 

Under it, Canadian and foreign sellers of software and telecommunications services will be required to register as tax collectors, if specified revenues exceed $10,000. 

The government will be collecting provincial sales tax of seven per cent, from a greater number of businesses in the digital economy, according to the document. The province estimates the tax will generate $11 million for the 2020/2021 fiscal year and $16 million for the following fiscal year. 

Finance Minister Carole James said Wednesday the province wants to make sure the tax system encompasses these types of online services. James said the PST is already collected on streaming services like CraveTV, Apple TV and Amazon Prime. 

"We want to make sure there's a level playing field," James said.

How it will work

University of Ottawa law professor and Canada research chair in Internet and e-commerce law Michael Geist said the tax will work like any other sales tax. Geist said Netflix and companies similar to it will collect the sales tax on behalf of the government.

"For everyday consumers the cost of the monthly bill on Netflix will increase to account for the sales tax," said Geist over the phone. 

A standard plan with Netflix Canada costs $13.99 per month, according to the streaming service's website. With the new tax, users will be charged roughly 98 cents a month, adding up to $11.76 per year. 

Some provinces already have similar tax

Two provinces — Saskatchewan and Quebec — are already collecting provincial sales tax from foreign web companies.

In Quebec, the provincial government had expected to raise $28 million in 2019 from the new tax. As of Aug. 31, it had already raised $38 million.

The new tax will come into effect in B.C. on July 1, 2020.

With files from Justin Mcelroy & Jonathan Montpetit