Expired Group Deals

Taxes on Groupon type deals

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  • Oct 11th, 2012 5:06 pm
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Member
Nov 15, 2006
250 posts
45 upvotes
Vancouver

Taxes on Groupon type deals

What are you guys experience on taxes charged on groupon type deals?

Recently I found many merchants are charging taxes on full value instead of the promo value, thus over charging taxes

I found these:
http://cdnbartaxadvisor.wordpress.com/2 ... pon-taxes/
http://www.cra-arc.gc.ca/E/pub/gl/p-202/p-202-e.pdf
(see example 7)

which clearly states taxes are to be charged on promo value...

thoughts?
3 replies
Deal Addict
Jul 18, 2005
2458 posts
916 upvotes
Toronto
[QUOTE]Example 7 – Deal-based vouchers Facts
A web-based company, registered for the GST/HST, is in the business of marketing/promoting
vouchers redeemable for goods and services offered at a discount by local merchants. The company
typically features a particular deal on its website and promotes the deal to its members via email and
social media. A member who purchases the deal receives an electronic voucher outlining the deal
characteristics such as: the nature of the goods and services offered by the merchant, the regular
price, the amount of the discount, the promotional price of the deal and any related terms and
conditions (e.g., any limitation on date or time for use). For example, the deal of the day may
resemble the following: Pay the promotional price of $20 for a 5 course meal at Restaurantco. Valued at $60,
discount 67%! Valid from Monday to Thursday! The member prints the voucher and redeems it for goods
and services at the merchant’s premises. The web-based company retains a portion of the sales
proceeds and remits the balance to the merchant.

Issue Does section 181.2 apply to the supply of the deal-based voucher?


Section 181.2 applies to the supply of the voucher as the voucher meets all of the conditions of a
gift certificate: it is for a supply of a meal identified on the voucher, it is issued for consideration
of $20, it is accepted as consideration for goods and services supplied by the merchant; the member
has only to present it to receive the goods and services and it has no intrinsic value. Accordingly, no
GST/HST is payable on the issuance of the voucher and, upon redemption, any GST/HST
applicable to the supply should be accounted for by the merchant by reference to the promotional
price of the deal. The web-based company is required to account for tax based on amounts retained
as consideration for the supply of the service of marketing/promotion of the voucher.[/QUOTE]

Never understood paying taxes on full amount. IMO, its similar to PMing at BB. You pay taxes on the reduced price, not the higher of the two..
Member
Nov 15, 2006
250 posts
45 upvotes
Vancouver
Totally agreed... its just like happy hour specials...merchant reduce the price of a product and you pay taxes on the promo amount

I just drives me nuts that merchants are consistently doing this nowadays and either pocketing the money or giving our gov't more money then they deserved!
Deal Expert
User avatar
Dec 14, 2005
18176 posts
345 upvotes
Richmond
:arrow:

Moved from "Off Topic" to "Group Deals > Group Deal Discussion"
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