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The Canada Revenue Agency (CRA) headquarters Connaught Building is pictured in Ottawa on Monday, Aug. 17, 2020.

Sean Kilpatrick/The Canadian Press

Canada’s social media influencers and video-game streamers are gaining followers they might not expect: Canada Revenue Agency auditors.

Ted Gallivan, the CRA’s assistant commissioner, told MPs Thursday that agency officials are watching social media accounts to see whether paid endorsements and other signs of income line up with streamers’ tax filings.

“Social influencers are generating a lot of money,” he said, pointing to gaming in particular. “If you could imagine, people are paid to play video games online. So what we’re doing is understanding these different pockets of non-compliance, and then what works” to encourage compliance.

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Mr. Gallivan said the CRA has conducted some initial research as it finalizes a broader enforcement plan in this area. He said the CRA has been looking at influencers with incomes above $500,000.

Instagram agrees to restrictions on paid influencers, says U.K. regulator

“The income ranges are quite surprising,” he said during a public accounts committee hearing on the government’s efforts to collect taxes in the digital economy. “It’s very surprising what people post on their Facebook pages, on their Twitter pages. And so there’s a lot of open-source intelligence that has led us to contact certain vendors.”

Mr. Gallivan said the CRA’s first move is usually to educate individuals about their tax obligations and then check to see whether they respond.

“Some of them are quite young. You know, their skills are perhaps not in accountancy,” he said.

Many Canadian video-game streamers have earned millions of followers on sites such as YouTube or Amazon’s Twitch, and are using their audiences to build six- or seven-figure incomes through subscription fees or merchandise sales. As one example, Evan Fong of Richmond Hill, Ont., has more than 25 million subscribers for his VanossGaming channel, and a Google spokesperson told The Globe earlier this year that his 2018 earnings were US$17-million.

In addition to increasing enforcement efforts related to social media, CRA officials said they will be consulting businesses over the coming months to be ready for the July 1 start of digital tax rules for companies announced this week in the economic update.

That includes requiring digital global companies such as Google, Netflix and Airbnb to collect federal sales tax from Canadian consumers. Senior Finance Department officials said Thursday the measures will require Parliament to approve new legislation adopting the measures prior to the July start.

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The update said requiring international digital platforms to register and account for the collection of federal sales tax will raise $1.2-billion over five years. The update also said Canada is prepared to apply a new corporate tax on digital services by 2022 if an international deal on a common approach has not been reached by then.

The update also announced $606-million over five years in new funding for the CRA to support programs that target international tax evasion and aggressive tax avoidance.

Thursday’s committee witnesses included Auditor-General Karen Hogan, whose office had published an audit in 2019 that warned Ottawa lost out on $169-million in sales tax revenue on foreign-based digital products and services in 2017 and that the government could not assess and collect all taxes on e-commerce transactions.

Ms. Hogan said the measures in Monday’s update are in line with the recommendations of the Organization for Economic Co-operation and Development for taxing the digital economy. She also welcomed the update’s announcement that her office’s annual budget will be increased by about $30-million a year.

Paul Rochon, the Finance Canada deputy minister who announced Tuesday that he was leaving his position later this month, also appeared at committee Thursday. Several MPs praised Mr. Rochon’s work and wished him well. Mr. Rochon expressed his appreciation, but did not elaborate on his reasons for leaving.

“Thank you very much for those gracious comments,” said Mr. Rochon, who briefly summarized a public service career that saw him return to the Finance Department six years ago as deputy minister, “... where I had the tremendous opportunity to work with great ministers, great colleagues and interact with fabulous parliamentarians.”

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With a report from Chris Hannay in Ottawa

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