If your Netflix monthly payment looks like it’s tax-free, it’s not. Canadian Netflix subscribers are technically required to voluntarily hand over the sales tax even if they don’t see it on their statements, according to Finance Canada.

If a foreign business does not charge sales tax, the responsibility to pay falls on the Canadian customer buying taxable goods and services over the Internet.

“In such cases, Canadian consumers are required to self-assess the amount of tax they owe to the Canada Revenue Agency,” a Finance Canada spokesperson, who did not want to be attributed, said in an email.

Prime Minister Stephen Harper raised the issue of a Netflix tax in the federal election campaign when he declared on Aug. 5 he was “100 per cent against a Netflix tax,” accusing the opposition NDP and Liberals of supporting a tax on the popular digital streaming service.

Both party leaders have denied Harper’s charge.

Unlike a business housed within Canada’s borders, the U.S.-based movie and television website does not charge its Canadian subscribers a sales tax.

“We don’t have employees, office, or assets in Canada and therefore are not required to register for and charge GST to our Canadian customers,” said Netflix spokesperson Anne Marie Squeo in an email to the Star.

Netflix charges subscribers $8.99 a month. In Ontario, applying a 13 per cent HST charge would add an extra $1.16 to the monthly bill.

So every year come tax time, an Ontario Netflix subscriber should, in theory, voluntarily mail the taxman $14.02.

Danny Cisterna, an accountant at Deloitte who specializes in the GST, said compliance is “probably low.”

“It’s probably more out of ignorance that people aren’t doing this,” Cisterna said.

“Some people might know they have this obligation and then they actually don’t do it – that would be, in my mind, a form of tax evasion.”

“We’re talking about such small amounts of money on a per-subscriber basis that, I mean, the reality is trying to pursue those kinds of cases just isn’t economical,” said Michael Geist, who holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa.

But even if the annual surcharge is chump change for an individual consumer, it adds up to millions in uncollected tax dollars for the federal and provincial governments.

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“Roughly 40 per cent of English speaking households subscribe to Netflix,” Geist said, estimating the company’s Canadian revenues add up to hundreds of millions of dollars.

In a submission to Finance Canada last summer, the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA) estimates Netflix would owe the Canadian government $11 million a year in GST payments, and the provinces another $15.6 million.

The 2014 Conservative federal budget announced a number of measuresto clamp down on this sort of “international aggressive tax avoidance,” and asked for public input on “ensuring the effective collection of sales tax on e-commerce sales to Canadians by foreign-based vendors.”

This input, the Finance Canada spokesperson says, “has helped shape Canada’s ongoing participation in the international discussions related to this issue.”

Telecom giant Rogers, which owns the Canadian television streaming service Shomi, said in its submission to the government that requiring foreign suppliers to register and collect sales tax would “help level the playing field.”

Shomi costs $8.99 a month, the same as Netflix, but plus tax.

“You’ve got Canadian based services like Shomi and [CraveTV] in the video space, which do collect and remit sales taxes because they’re local, and in effect face a 13 per cent disadvantage relative to Netflix because of the tax,” Geist said.

As for Netflix itself, the company refused to weigh in on the discussion.

“Netflix does not engage in electoral politics and has not had discussions on this particular issue,” spokesperson Squeo said.

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