CRTC Revenue-based Contribution Regime Reporting Instructions

1.1

The purpose of these Reporting Instructions is to provide a general understanding of how the revenue-based contribution regime works and to summarize the reporting requirements. In the event of a discrepancy between these Reporting Instructions and the Commission approved decisions and orders, the Commission approved decisions and orders will take precedence.

1.2

In Changes to the contribution regime, Decision CRTC 2000‑745, 30 November 2000, the Commission introduced a national revenue‑based contribution collection mechanism (the contribution regime).

1.3

Under this contribution regime, all telecommunication service providers (TSPs) are required to file annual contribution reports with the CRTC, so that their contribution status can be determined. TSPs, or groups of related TSPs, with annual Canadian Telecommunications Service Revenues equal to or greater than $10 million (i.e., before deductions) are required to contribute (Required Contributors) towards the provision of Video Relay Service, the expansion of broadband Internet services in Canada and the subsidization of high-cost residential local telephone service in rural and remote parts of Canada.

1.4

Contribution is collected through the application of a revenue‑percent charge on a TSP's contribution‑eligible revenues. Contribution-eligible revenues are calculated based upon a TSP's Canadian Telecommunications Service Revenues less specific deductions for subsidy payments received from the National Contribution Fund, inter-carrier payments meeting certain criteria, and terminal equipment revenues. The revenue-percent charge is established annually using the ratio of the national subsidy requirement (the total amount to be collected) to the total estimated contribution‑eligible revenues of all TSPs who are required to contribute.

1.5

Contribution is collected by an independent third-party known as the Central Fund Administrator (CFA), who then distributes the money to the Canadian Administrator of Video Relay Service, broadband funding recipients and subsidy to those incumbent local exchange carriers serving residential customers in high-cost areas (Eligible Recipients). Currently, the CFA is Welch Fund Administration Services Inc.

1.6

In Revised Procedures for the Operation of the National Contribution Fund, effective 1 January 2020, Telecom Decision CRTC 2019-383, 28 November 2019, the Commission approved revised procedures for the operation of the National Contribution Fund, which include, among other things, the annual reporting requirements with the CRTC, the monthly reporting requirements with the CFA and the CFA audit requirements.

2.1

The following are the main Commission decisions and orders related to the revenue‑based contribution regime. A complete list can be found on the CRTC's website at Contribution decisions/orders/circulars - Follow-up to Decision CRTC 2000-745 - Changes to the contribution regime.

"Decision 2000‑745" means Changes to the contribution regime, Decision CRTC 2000‑745, 30 November 2000.

"Decision 2002-35" means Changes to the annual contribution reporting requirements, Telecom Decision CRTC 2002‑35, 31 May 2002.

"Decision 2005‑32" means Accutel Conferencing Systems Inc. – Definition of terminal equipment revenues within the contribution regime, Telecom Decision CRTC 2005‑32, 2 June 2005.

"Decision 2019-383" means Revised Procedures for the Operation of the National Contribution Fund, effective 1 January 2020, Telecom Decision CRTC 2019-383, 28 November 2019.

"Order 2001‑220" means Industry Consensus Reports submitted by the Contribution Collection Mechanism (CCM) Implementation Working Groups, Order CRTC 2001‑220, 15 March 2001.

"Order 2001‑221" means Disputed issues submitted by the Contribution Collection Mechanism (CCM) Implementation Working Groups, Order CRTC 2001‑221, 15 March 2001.

"Order 2001‑288" means Definition of Canadian non‑telecommunications service revenues for the purpose of the contribution regime, Order CRTC 2001‑288, 11 April 2001.

2.2

References to the above decisions and orders include, as appropriate, such decisions and orders as varied, amended, refined and/or supplemented by the Commission from time to time.

3.1

All TSPs are required to file annual contribution reports with the Commission, by 31 March, based upon their financial statements of the fiscal year ending in the immediate prior calendar year (i.e., the March 2020 filing would be based upon the 2019 financial statements regardless of when the 2019 financial year-end occurred). This information is filed in confidence with the Commission.

3.2

Companies filing on behalf of a group of related TSPs are required to file a separate Annual Revenue Report, with supporting information, for each TSP. In the filing of an Annual Revenue Report, a list of all related TSPs is required, whether the TSPs file separately or as part of the group. Any corporate changes or changes to the list of related companies must be communicated to the CRTC within 30 days of the date that they occur.

The definition of a related party can be found in International Accounting Standard 24 of the CPA Canada Handbook – Accounting. The minimum threshold of $10 million in Canadian Telecommunications Service Revenues applies to the total revenue for a group of related TSPs.

3.3

The reporting forms include (i) the Annual Revenue Report Form (form 601), (ii) three forms for the breakdown of the various non‑contribution-eligible revenues (forms 602, 603 and 605) and (iii) the inter-carrier payment breakdown form (form 604).

3.4

Companies are required to file their annual contribution report through the 60x series of forms contained in the CRTC’s web-based data collection system. Examples of the forms are in the appendices to these instructions.

3.5

For TSPs with total operating revenues of less than $10 million, or groups of related TSPs with combined total operating revenues of less than $10 million, simplified contribution reporting consists of:

• Completing Area A (Company identification), Area B (Contact information) and Area C (Reporting year information) of the Annual Revenue Report Form (form 601), including a list of all related TSPs. A copy of the Annual Revenue Report Form can be found in Appendix 1 of these instructions.

• Providing a copy of the TSP's financial statements for the immediate prior calendar year.

  A TSP that does not have audited financial statements must provide an affidavit, signed by two officers of the company, with one of the officers being the company's chief financial officer, attesting to the accuracy of the financial statements.  A sample affidavit can be found in Appendix 5 of these instructions.

3.6

For TSPs with total operating revenues equal to or greater than $10 million, or groups of related TSPs with combined total operating revenues equal to or greater than $10 million, contribution reporting consists of:

• Completing the entire Annual Revenue Report Form (form 601), including a list of all related TSPs, the calculation of Canadian Telecommunications Services Revenues and the further calculation of the Contribution‑Eligible Revenues. A copy of the Annual Revenue Report Form can be found in Appendix 1 of these instructions.
• Completing the Non‑Contribution‑Eligible Revenues forms (forms 602, 603 and 605) separately, when amounts are entered on lines D.2 (Non-Canadian Revenues), D.3 (Canadian Non‑Telecommunications Revenues) and/or D.10 (Non-Contribution-Eligible Revenues eliminated from those bundles to which both contribution-eligible and non‑eligible revenue are attributed) of the Annual Revenue Report Form (form 601). A copy of the Non‑Contribution‑Eligible Revenues form can be found in Appendix 2 of these instructions.
• Completing the Inter-Carrier Payments form (form 604) when an amount is entered on line D.6 (Inter‑carrier payments) of the Annual Revenue Report Form (form 601). A copy of the Inter-Carrier Payments form can be found in Appendix 3 of these instructions.
• Providing a copy of the TSP's financial statements for the immediate prior calendar year.

• Providing a compliance statement to ensure the integrity of the information filed.

  A TSP with audited financial statements is required to have its external auditors attest to the accuracy of the information filed. A sample audit report can be found in Appendix 4 of these instructions.

  A TSP that does not have audited financial statements can provide an affidavit, signed by two officers of the company, with one of the officers being the company's chief financial officer, attesting to the accuracy of the information filed, or have an external auditor attest to the accuracy of the information. A sample affidavit can be found in Appendix 5 of these instructions.

4.1

All TSPs are required to complete the following sections of the Annual Revenue Report Form (form 601):

• Area A: Company identification – the legal name of the company, the name under which the company does business and a list of related TSPs. A separate list of related TSPs may be attached, if required.
• Area B: Contact information – the name, title, telephone number, fax number and email address of the person completing the form.
• Area C: Reporting year information – the reporting year being filed (i.e., 2019 for the report due 31 March 2020) and the company's fiscal year-end date.

4.2

TSPs with total operating revenues equal to or greater than $10 million, or groups of related TSPs with combined total operating revenues equal to or greater than $10 million, are also required to complete Area D: Calculation of Contribution-Eligible Revenues of the Annual Revenue Report Form (form 601).

4.3

The following is a summary of how to complete Area D: Calculation of Contribution-Eligible Revenues of the Annual Revenue Report Form (form 601):

Line D.1.A: Total Operating Revenues reported in financial statements:

• Defined in Order 2001-220 under the term "Operating Revenues".
• The amount entered on this line must match the total operating revenues contained in the financial statements provided.

Line D.1.B: Add deductions from revenues:

• Defined in Order 2001-220 under the term "Operating Revenues".

Line D.1: Total Operating Revenues for contribution purposes:

• A calculated amount (D.1.A + D.1.B).

Line D.2: Non-Canadian Revenues:

• Defined in Order 2001-220.
• Service must be provided outside of Canada.
• A Non‑Contribution-Eligible Revenue form (form 602) must be completed.

Line D.3: Canadian Non-Telecommunications Revenues:

• Defined in Order 2001-288.
• Cannot be any service incidental to the provision of a telecommunications service.
• A Non‑Contribution-Eligible Revenue form (form 603) must be completed.

Line D.4: Canadian Telecommunications Services Revenues:

• A calculated amount (D.1 - D.2 - D.3).

Line D.5: Contribution payments received:

• Defined in Order 2001-220.

Line D.6: Inter-carrier payments:

• Defined in Order 2001-220.
• The Inter-Carrier Payments form (form 604) must be completed.
• Inter-carrier payments can only be deducted if they were paid to another TSP for a telecommunications service and incurred to earn contribution-eligible revenue.
• Inter-carrier payments cannot be deducted if they relate to revenues that were claimed for deduction on any other line of the Annual Revenue Report Form and/or were used for normal business purposes.

Line D.7:  No longer being used (formerly Retail Internet Service Revenues) and must be reported as zero (0).

Line D.8:  No longer being used (formerly Retail Paging Service Revenues) and must be reported as zero (0).

Line D.9: Terminal Equipment Revenues:

• Defined in Order 2001-221.
• The terminal equipment must be located on the customer's premises to be eligible for a deduction (Decision 2005-32).

Line D.10: Non-Contribution-Eligible Revenues eliminated from those bundles to which both contribution-eligible and non-eligible revenue are attributed:

• Defined in Order 2001-220 with additional information provided in Order 2001-221.
• A Non‑Contribution-Eligible Revenue form (form 605) must be completed.
• Additional information with respect to bundles and bundling can be found below.

Line D.11: Subtotal:

• A calculated amount (D.5 + D.6 + D.7 + D.8 + D.9 + D.10).

Line D.12: Contribution-Eligible Revenues on package discounts:

• Defined in Order 2001-221.
• If two or more services are offered in a package where the contribution-eligible revenues are discounted and the non-contribution-eligible revenues are higher than the stand-alone price, the difference between the price charged for the non‑contribution‑eligible service and the stand-alone price is contribution-eligible and should be reported on line D.12.

Line D.13: Contribution-Eligible Revenues:

• A calculated amount (D.4 - D.11 + D.12).
• Contribution is calculated based upon this line and the approved revenue‑percent charge.

4.4

The term ‘bundling' generally refers to a situation where one rate covers a number of products and/or services. If a bundle includes contribution-eligible and non-contribution eligible revenues, the bundling rules apply as per Orders 2001-220 and 2001-221. To ensure that revenues are appropriately recorded, revenues associated with bundles should be reported as follows:

Contribution-eligible and non-contribution-eligible revenues in a bundle:

• If the bundle contains non-contribution-eligible revenues related to Lines D.2 and/or D.3 and contribution-eligible revenues, then the non-contribution-eligible revenues should be reported on line D.2 or D.3, as applicable.
• If the bundle contains non-contribution-eligible revenues related to Line D.9 and contribution-eligible revenues, then the non-contribution-eligible revenues must be reported on line D.10 only.
• If the bundle contains non-contribution-eligible revenues related to Lines D.2, D.3, and/or D.9 and contribution-eligible revenues, and the non-contribution-eligible revenues cannot be separated by line, then the non-contribution-eligible revenues must be reported on Line D.10 only. Non‑contribution-eligible revenues associated with Line D.9 cannot be reported on Lines D.2 or D.3.

Bundle of non-contribution-eligible revenues only:

• If the bundle contains only non-contribution-eligible revenues, then the revenues should be reported on Lines D.2, D.3, and/or D.9, as applicable. If the revenues cannot be separated, then the revenues must be reported on Line D.10 only. Non‑contribution-eligible revenues associated with Line D.9 cannot be reported on Line D.2 or D.3.

Contribution-eligible revenues represent less than 5% of the bundle:

• If the bundle contains less than 5% contribution-eligible revenues, then the entire bundle is considered non-contribution-eligible and the revenues should be reported on Lines D.2, D.3, and/or D.9, as applicable (including the immaterial portion of contribution-eligible revenues).
• If the non-contribution-eligible revenues cannot be separated, all of the revenues should be reported on Line D.10. If the total of the contribution-eligible revenues and the non‑contribution‑eligible revenues that would normally be reported in Line D.9 represents less than 5% of the bundle, you may report the total revenues from the bundle on Line D.2 or D.3 as applicable.

5.1

When a TSP claims an amount on lines D.2 (Non-Canadian Revenues), D.3 (Canadian Non‑Telecommunications Revenues) and/or D.10 (Non-contribution-eligible revenues eliminated from those bundles to which both contribution-eligible and non-contribution-eligible revenues are attributed) of their Annual Revenue Report Form (form 601), a detailed breakdown for each line is required and should be reported on a separate Non‑Contribution‑Eligible Revenues form (forms 602, 603 and 605, respectively). The information to be provided is a detailed description of the product(s)/service(s) provided and the associated revenue.

6.1

Inter-carrier payments can only be claimed if they were paid to another TSP for a telecommunications service and incurred to earn contribution-eligible revenues. Inter-carrier payments cannot be deducted if they relate to revenues that were claimed for deduction on any other line of the Annual Revenue Report Form (form 601) and/or were used for normal business purposes.

6.2

When a TSP claims an amount on line D.6 (Inter-Carrier Payments) of its Annual Revenue Report Form (form 601), a detailed breakdown is required and should be reported on the Inter-Carrier Payments form (form 604). The information to be provided is a list of the supplier(s) name(s), service(s) purchased from that supplier(s) and the associated expense.

7.1

Following a review of the annual contribution report, the CRTC will determine if a TSP is a Required Contributor for the current calendar year for purposes of the National Contribution Fund Administration Agreement and these instructions. In the event that the CRTC determines that the TSP is a Required Contributor, the CRTC will notify such TSP and the CFA that such TSP is a Required Contributor for the year. The CRTC will also notify the CFA of an estimate of the expected contribution to be received on a monthly basis.

7.2

If a TSP becomes a Required Contributor and it has not previously executed and delivered to the CFA a Required Contributor Accession Agreement, whereby the TSP becomes a party to the National Contribution Fund Administration Agreement, the Required Contributor shall execute and deliver to the CFA such Required Contributor Accession Agreement within thirty (30) days of such determination by the CRTC.

7.3

In Decision 2019-383, the Commission approved revised procedures for the operation of the National Contribution Fund, which include, among other things, the monthly reporting requirements with the CFA, the CFA processing schedule and the CFA audit requirements.

7.4

Required Contributors must report their monthly calculation of contribution-eligible revenues, based upon their previous month's actual financial information, and remit the related contribution payment to the CFA in accordance with the CFA processing schedule.

The format of the monthly calculation of contribution-eligible revenues, filed with the CFA, is the same as Area D of the Annual Revenue Report Form (form 601). The breakdowns of non‑contribution-eligible revenues (forms 602, 603 and 605) and inter‑carrier payments (form 604) are not required to be filed with the CFA.

7.5

Required Contributors must also file a report with the auditor of the National Contribution Fund on or before May 31 of each year, showing the total contribution-eligible revenues for the immediate prior calendar year, in the same format as that used for the filing of this information on a monthly basis with the CFA, and a compliance statement attesting to the accuracy of the information provided.

• Required Contributors with $200 million or more of annual contribution-eligible revenues are required to file an audit report attesting to the accuracy of the information provided.
• Required Contributors with less than $200 million of annual contribution-eligible revenues may provide an affidavit, signed by two officers of the company, one of those officers being the chief financial officer, attesting to the accuracy of the information provided.