Canada - Online Streaming Platforms and New Tax Burden

On June 4, 2024, the Canadian Radio-television and Telecommunications Commission (Commission) issued Broadcasting Regulatory Policy CRTC 2024-121 (Policy), which includes a 5% contribution on online streaming services exceeding a specific threshold.

This was done following the introduction of the Online Streaming Act, which amended the Broadcasting Act. Under the Online Streaming Act, the Commission has to modernize the Canadian broadcasting framework and ensure that online streaming services significantly contribute to Canadian and Indigenous content.

Impact of the Policy

The Commission's Policy obligates online streaming services with annual revenue of CAD 25 million or more not affiliated with a Canadian broadcaster to contribute 5% of their revenue to certain funds. The Commission projected that from the moment the Policy becomes effective, on September 1, 2024, it will contribute to CAD 200 million per year in new funding.

These funds will be transferred to the local news on radio and television, French-language content, Indigenous content, and content created by or for equity-deserving groups, official language minority communities (OLMC), and Canadians of diverse backgrounds.

The contributions are divided into two groups:

1. Contributions from audio-visual online streaming services,

2. Contributions from audio online undertakings.

The Commission further provided information on which fund will receive this 5% contribution and in what percentage. According to the information provided by the Commission, the contributions from audio-visual online streaming services will be transferred to the following funds:

• 2% to the Canada Media Fund and direct expenditures towards certified Canadian content,

• 1.5% to the Independent Local News Fund,

• 0.5% to the Black Screen Office Fund, the Canadian Independent Screen Fund for BPOC creators, and the Broadcasting Accessibility Fund,

• 0.5% to the Certified Independent Production Funds supporting OLMC producers and producers from diverse communities and

• 0.5% to the Indigenous Screen Office Fund.

On the other hand, contributions from audio online undertakings will be divided among the following funds:

• 2% to FACTOR and Musicaction,

• 1.5% to a new temporary fund supporting local news production by commercial radio stations outside of the designated markets,

• 0.5% to the Canadian Starmaker Fund and Fonds RadioStar,

• 0.5% to the Community Radio Fund of Canada,

• 0.35% to direct expenditures targeting the development of Canadian and Indigenous content and a variety of selected funds and

• 0.15% to the Indigenous Music Office and a new fund to support Indigenous music.

Conclusion

After Canada retroactively imposed a 3% Digital Service Tax to 2022 last month, this 5% contribution represents an additional cost for online streaming service providers.

Some of the biggest online streaming service providers, like Netflix, already opposed this contribution, stating that it could represent potentially discriminatory burdens. In contrast, Amazon, Apple, Google, Paramount Global, and Spotify noted that the imposition of this contribution is premature.

Source: Broadcasting Regulatory Policy CRTC 2024-121