An Amazon warehouse north of Calgary in Balzac, Alta., is shown on Monday, May 4, 2020. THE CANADIAN PRESS/Jeff McIntosh

Federal pledge to get GST from goods in Amazon warehouses could net $600M

GST is collected on the wholesale value of the goods when they come across the border

The parliamentary budget officer estimates the Trudeau Liberals’ pledge to collect federal sales tax on some goods sitting in Amazon warehouses could net Ottawa just over $600 million.

The extra tax revenue is spread over five years, starting this year and ramping up every year thereafter for a total of $604 million over that time.

The proposal would try to close a loophole for unsold goods foreign-based sellers ship to Canada, then house until they are sold and shipped domestically to local buyers.

GST is collected on the wholesale value of the goods when they come across the border but the federal sales tax isn’t always collected by sellers when the goods are sold to consumers.

That creates a gap the Liberals want to close by either making sellers registered to collect the GST do so on the final sale price, or making platforms like Amazon responsible for it instead.

The Liberals are promising to have the policy come into effect on July 1.

There are sources of uncertainty within the estimate crafted by budget officer Yves Giroux’s officials, including how much of the shift to online shopping caused by COVID-19 will remain when the pandemic recedes.

The report was one of two released by Giroux’s office on Thursday as it continues to cost out promises the Liberals made in November’s economic statement.

The second report estimated that a crackdown on tax cheats could yield close to $800 million in new revenue over a five years.

Collection is likely to start slow by the budget office’s forecasts, beginning with just $1 million in tax revenue this year, and rising each year thereafter.

By 2026, the budget office suggests federal coffers could collect $782 million from Canadians using offshore tax havens or aggressive plans to reduce the amounts they would otherwise have to pay.

To get there, the government will have to spend $606 million over the same period to boost the audit capacity at the Canada Revenue Agency to focus on those most likely to use such schemes, including wealthy Canadians.

The report warns it is difficult to predict with certainty how much more spending will lead to the collection of extra tax revenue.

Giroux’s experts also write it is difficult to predict how taxpayers will respond to the beefed-up audit capacity at CRA, noting some may declare more of their offshore holdings, while others may find new ways to evade taxes that are harder to detect in audits.

The report also said the extra audits could lead to more appeals, delaying when taxes are collected.

The government suspended its audit activities for part of last year because of the pandemic and the Tax Court of Canada did not sit. The PBO report made note of those issues, pointing to comments from the court’s chief justice, in a webinar earlier this month, warning of a deluge of appeals likely to be filed later this year.

The Canadian Press

Like us on Facebook and follow us on Twitter.

Want to support local journalism? Make a donation here.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

David Leger (left) and Ben Nyland (right) at the 2016 Globe Conference. As Loop Energy grew into a multi-million dollar enterprise, Leger handed the CEO reins to Nyland, who continues to run the company. (Submitted photo)
Loop Energy: Believing in a dream pays off for Chilliwack investors

This is part 3 of a 3-part series on the rise of Loop Energy, now being traded publicly on the TSX

The Harrison Hot Springs village office, as seen from the back. (Grace Kennedy/The Observer)
Harrison to see more than half its revenue from grants in 2021

Harrison council approved the 2021-2024 Financial Plan Monday night

Heather P. (Right) and Hope Buy-Low Foods store manager Pauline Newbigging (left) show off Heather’s winnings as she enjoys free groceries for a year. The prize package from Buy-Low, one of six chain-wide, is valued at more than $5,000. (Photo/Pauline Newbigging)
Hope Buy-Low shopper wins free groceries for a year

Prize package from MYNR app valued at $5,200

Signs geared to protecting salmon habitat were damaged at the Fraser River near Chilliwack. (Facebook)
New signs for protecting Fraser River habitat near Chilliwack vandalized

Fishery officers want off-road users to enjoy river resource in the ‘least damaging way possible’

Kelli Paddon in her virtual speech to the House of Commons on Tuesday, March 2. (B.C. Legislature)
Chilliwack-Kent MLA thanks Agassiz’s Miel Bernstein in legislature speech

Bernstein is the founder of Project AIM, which gives people in need access to period products

Victoria’s Swartz Bay terminal. (Black Press Media file photo)
BC Ferries offers cheaper, prepaid fare options

Ferry service preparing for busy terminals when travel restrictions are lifted

FILE - Dolly Parton arrives at the 61st annual Grammy Awards on Feb. 10, 2019, in Los Angeles. The Grammy-winning singer, actor and humanitarian posted a video on Tuesday, March 2, 2021, of her singing just before getting her COVID-19 vaccine shot. Parton donated $1 million to Vanderbilt University Medical Center in Nashville, Tennessee for coronavirus research. (Photo by Jordan Strauss/Invision/AP, File)
‘Vaccine, vaccine’: Dolly sings ‘Jolene’ rewrite before shot

The Grammy-winning legend turned 75 this year

Deputy Prime Minister and Minister of Finance Chrystia Freeland speaks about the Fiscal update during a news conference in Ottawa, Monday November 30, 2020. THE CANADIAN PRESS/Adrian Wyld
COVID-19: Wage and rent subsidies, lockdown support to be extended until June

Chrystia Freeland says now is not time to lower levels of support

The area on Cordova Bay Road where ancestral human remains were discovered Feb. 22. (Submitted photo)
Human remains discovery a reminder of B.C. Indigenous culture dug up and displaced

‘These are the people who inspired and birthed the generations that we now have here’

Join Black Press Media and Do Some Good
Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Older rental apartments are prime candidates for renovations, and could result in lost affordable housing stock. (Zoë Ducklow photo)
B.C.’s renoviction overhaul a good start, but won’t preserve affordable stock, lawyer says

And still no protection for people who can’t pay rent due to COVID-19

Most Read