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

FILE – A COVID-19 vaccine being prepared. (Olivia Sullivan/Sound Publishing)
B.C. seniors 80 years and older to get COVID vaccine details over next 2 weeks: Henry

Province is expanding vaccine workforce as officials ramp up age-based rollout

Interior Health reported 43 new COVID-19 cases in the region Feb. 23, 2021 and no additional deaths. (Jennifer Smith - Morning Star)
43 new cases of COVID reported in Interior Health

No new deaths, Williams Lake outbreak over

Black Press file photo.
Interior Health: 6 new deaths and 67 new cases of COVID-19 over the weekend

An outbreak has been declared at Kelowna General Hospital

Anyone with additional information is asked to contact the Castlegar RCMP at 250-365-7721. Photo: Trail Times
Woman charged for allegedly entering Castlegar home and stabbing 2 teens

Castlegar police report the two teenagers are recovering in hospital

A health-care worker prepares a dose of the Pfizer-BioNTech COVID-19 vaccine at a UHN COVID-19 vaccine clinic in Toronto on Thursday, January 7, 2021. THE CANADIAN PRESS/Nathan Denette
59 new cases of COVID-19 in Interior Health

The total number of cases in the region is now at 7,131

Dr. Bonnie Henry leaves the podium after a news conference at the legislature in Victoria on Friday, January 22, 2021. THE CANADIAN PRESS/Chad Hipolito
B.C. reports 559 new cases of COVID-19, one death

4,677 cases of the virus remain active in the province; 238 people are in hospital

Vancouver Canucks left wing Antoine Roussel (26) tries to get a shot past Edmonton Oilers goaltender Mike Smith (41) during second period NHL action in Vancouver, Tuesday, Feb. 23, 2021. THE CANADIAN PRESS/Jonathan Hayward
Canucks cough up 3-0 lead, fall 4-3 to visiting Edmonton Oilers

Vancouver falls to 8-13-2 on the NHL season

Jessica McCallum-Miller receives her signed oath of office from city chief administrative officer Heather Avison on Nov. 5, 2018 after being elected to Terrace City Council. McCallum-Miller resigned on Feb. 22, 2021, saying she felt unsupported and unheard by council. (Black Press Media File Photo)
Terrace’s 1st Indigenous councillor resigns citing ‘systemic and internalized racism,’ sexism

McCallum-Miller said in a Facebook post she felt unheard and unsupported by council

Temporary changes to allow for wholesale pricing for the hospitality industry were implemented June 2020 and set to expire March 31.	(Pixabay photo)
Pubs, restaurants to pay wholesale prices on liquor permanently in COVID-recovery

Pre-pandemic, restaurateurs and tourism operators paid full retail price on most liquor purchases

Wade Dyck with Luna, a dog who went missing near the Chasm for 17 days following a rollover on Feb. 5. (Photo submitted).
Dog missing for 17 days through cold snap reunited with owner in northern B.C.

Family ecstatic to have the Pyrenees-Shepherd cross back home.

Quesnel RCMP confirmed they are investigating a residential break-in at a home on the Barkerville Highway. (File image)
Thieves make off with $300K in Cariboo miner’s retirement gold

Tim Klemen is offering a reward for the return of his gold

Ghislaine Maxwell was arrested in New Hampshire. Image: The Canadian Press
Epstein associate Ghislaine Maxwell makes third attempt at bail on sex charges

Maxwell claims she will renounce her U.K. and French citizenships if freed

THE CANADIAN PRESS/Sean Kilpatrick
Feds agree people with mental illness should have access to MAID — in 2 years

This is one of a number of changes to Bill C-7 proposed by the government

Most Read