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CanadaPrivacy & AI

# Bill C-27 CPPA and AIDA: Privacy and AI Obligations for Hardware and IoT Manufacturers

Canada is overhauling its federal privacy framework and, for the first time, introducing dedicated AI legislation. For connected hardware companies and IoT device makers, Bill C-27 creates new consent requirements, mandatory privacy management programs, and potential obligations for AI features embedded in products. The law has not received Royal Assent yet — but waiting until it does is the wrong strategy. This guide explains what is coming and what to do now.

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At a glance

Replaces

PIPEDA (once Royal Assent received)

Max penalty

5% global revenue or CAD $25M

AI regulation

AIDA — high-impact AI systems

Status

Before Senate as of 2025

## Key concepts in Bill C-27 for hardware companies

### What Bill C-27 replaces and when it applies

Bill C-27 (Digital Charter Implementation Act, 2022) proposes to repeal and replace PIPEDA — the Personal Information Protection and Electronic Documents Act — with three new statutes: the Consumer Privacy Protection Act (CPPA), the Personal Information and Data Protection Tribunal Act, and the Artificial Intelligence and Data Act (AIDA). As of mid-2025, Bill C-27 has passed the House of Commons and is before the Senate — it has not yet received Royal Assent. PIPEDA remains the operative federal private-sector privacy law until CPPA comes into force. Companies should begin preparing for CPPA compliance now, as coming-into-force timelines are typically one to two years after Royal Assent.

### CPPA core obligations for connected device manufacturers

CPPA introduces six major obligations that directly affect hardware and IoT product companies: (1) A mandatory privacy management program covering policies, procedures, and practices for handling personal information across the product lifecycle; (2) Express consent — a higher bar for collecting and using sensitive personal information; (3) Algorithmic transparency — individuals have the right to an explanation of automated decision-making that significantly affects them; (4) Data mobility — prescribed portability of personal information to competing organizations; (5) De-identification — personal information must be de-identified before being used for secondary purposes; (6) Heightened protections for children's personal information. IoT devices collecting location, health, biometric, or behavioural data are squarely in scope.

### AIDA — Canada's AI regulation framework

The Artificial Intelligence and Data Act (AIDA) would establish requirements for high-impact AI systems — a regulatory category defined by the Minister of Innovation, Science and Economic Development (ISED) through regulation rather than on the face of the Act. Designers and deployers of high-impact AI systems would face obligations including risk assessments, mitigation measures, monitoring, and incident reporting. Electronics manufacturers embedding AI for facial recognition, autonomous decision-making, predictive maintenance, or content filtering may fall within the high-impact AI category depending on the eventual ministerial definition. AIDA also creates criminal offences for the reckless use of illegally obtained personal data to train or operate AI systems.

### Privacy management program — what it must contain

Under CPPA Section 9, organizations must implement a privacy management program covering: policies and practices related to the management of personal information; a training program for employees; a process for receiving and responding to complaints; and a process for protecting personal information throughout its lifecycle. For hardware companies, this translates directly into product obligations — embedding privacy-by-design in product development cycles, maintaining a record of personal information collected by each connected product, establishing retention and deletion schedules, and documenting all third-party data processors (cloud providers, analytics SDKs, remote diagnostics services) that receive data from the device.

### CPPA consent framework and IoT devices

CPPA requires that consent be meaningful — the individual must genuinely understand the purposes for which their information is collected and the reasonably foreseeable consequences of providing or refusing consent. For IoT products, this creates significant pressure on first-time setup and onboarding flows: plain-language disclosure of what the device collects, who receives the data, and for what purposes must be presented before collection begins. The CPPA also permits legitimate interest as a basis for collection without express consent, subject to a necessity and proportionality test — a potentially relevant carve-out for device security monitoring and fraud detection functions.

### OPC enforcement and penalties under CPPA

CPPA would create a new Personal Information and Data Protection Tribunal (PDPT) with the power to impose administrative monetary penalties of up to 5% of global annual revenues or CAD $25 million, whichever is greater, for serious violations. The Office of the Privacy Commissioner of Canada (OPC) retains investigation and recommendation powers, with referral to the Tribunal for penalty imposition. This is a significant escalation from the current PIPEDA regime, where the OPC can only publish findings and name organisations. Cross-border enforcement cooperation is also strengthened under the CPPA — a material consideration for any company transferring Canadian user data to US or EU data centres.

## Preparing for CPPA and AIDA compliance

01

Audit the current data collection practices of all connected products in your portfolio — identify every data type collected (location, usage, biometric, health), the basis for collection, and where the data is sent.

02

Map all data flows to third-party processors: cloud service providers, analytics SDKs, remote diagnostics platforms, and any other service that receives personal information from the device or its companion app.

03

Update your public-facing privacy policy to CPPA-compliant standard — plain language, purpose-specific, with disclosure of all processors and cross-border data transfers.

04

Implement in-device and in-app consent mechanisms that satisfy the CPPA's meaningful consent standard: granular, purpose-specific, easy to withdraw, and separate from terms of service acceptance.

05

Identify AI features embedded in your products or backend services that may qualify as high-impact AI systems under AIDA — document the feature's decision-making scope, affected population, and risk profile.

06

Build the privacy management program documentation required under CPPA Section 9: policies, training records, complaint process, processor agreements, and retention/deletion schedules.

07

Establish a data subject rights request process covering access, correction, deletion, and portability requests — CPPA timelines and response requirements will be set by regulation, but processes should be in place at Royal Assent.

08

Monitor Bill C-27's Senate progress and the timing of Royal Assent — coming-into-force provisions will set the compliance deadline, and some obligations may have phased implementation timelines.

## Frequently asked questions

### When does Bill C-27 come into force?

Bill C-27 has not yet received Royal Assent as of mid-2025 — it is currently before the Senate. PIPEDA remains the operative federal privacy law until the CPPA comes into force. Once Royal Assent is granted, the coming-into-force date will be set by Order-in-Council; historically, major privacy legislation in Canada has allowed one to two years between Royal Assent and the date the obligations take effect. Some provisions of AIDA may have separate coming-into-force timelines, as ministerial regulations defining high-impact AI systems must be developed first.

### Does CPPA apply to IoT devices?

Yes. Any organization that collects, uses, or discloses personal information in the course of commercial activity in Canada is subject to the CPPA, regardless of whether the collection happens through a physical device, an app, a website, or another channel. IoT devices that collect location data, usage patterns, biometric information, health data, or any other information that identifies an individual are directly in scope. The CPPA also applies to personal information collected outside Canada if the organization is subject to Canadian jurisdiction — relevant for foreign manufacturers whose devices are used by Canadian consumers.

### What is a high-impact AI system under AIDA?

AIDA does not define high-impact AI systems on its face — the definition is delegated to regulations to be developed by the Minister of ISED. The Act establishes that the category will be based on the nature of the AI system and the potential for significant harm to individuals or groups. Based on the government's accompanying regulatory impact statements, examples likely to be in scope include facial recognition systems, AI used in employment or credit decisions, and systems that make or significantly influence decisions affecting health, safety, or fundamental rights. Electronics manufacturers embedding AI inference on-device should begin documenting the decision-making scope and affected population of each AI feature now.

### What are the penalties under CPPA?

The CPPA creates a two-tier penalty regime. Tier 1 violations — such as failing to maintain a privacy management program or failing to respond to access requests — attract penalties of up to 3% of global annual revenues or CAD $10 million, whichever is greater. Tier 2 violations — the most serious, including collecting or using personal information without valid consent, contravening a Tribunal order, or using de-identified information to re-identify individuals — attract penalties of up to 5% of global annual revenues or CAD $25 million, whichever is greater. The Personal Information and Data Protection Tribunal (PDPT) imposes penalties on referral from the OPC; the OPC itself cannot directly impose fines.

**Disclaimer:** Educational resource only. Regulatory requirements change. Consult a qualified compliance specialist before making decisions.

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