In my last post I talked about how Fairmont Vancouver and DealFind are not making it clear to consumers as to WHY they are charging the 12% HST on the original value of $76 instead of on the discounted price of $38.. Well, I actually took the time to find out (unlike DealFind), and it turns out that they might actually be CORRECT, and that tax should be charged on the actual value ($76 in this case).
This is because the vouchers are essentially like “gift certificates”. Tax is applied onto the original value, and then the discount is applied onto the final bill.
Refer to CRA’s link here: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/gnrl/txbl/cpns/gft-eng.html
HOWEVER, this does NOT mean that DealFind and Fairmont are 100% correct.
Last year Fairmont offered the deal, with tax applied to the discounted value. They probably found out later that they messed up, and therefore did not want to do the same thing again this year. However, instead of admitting to their mistake when people inquired, they decided to avoid the topic altogether. DealFind probably knows about this as well, and instead of providing customers with solid answers, decided to copy/paste the same answer over and over again: “The taxes and gratuities paid on the $76 dollar value is because it is a food service and this is the government regulation for taxing.”
What government regulation? Where is the evidence? People are not concerned because it’s going to be costing them an extra $4.50 to enjoy the afternoon tea, but because there are over 13,000 vouchers sold, so if the tax should only be on the discounted price, who/where is the extra tax going towards??
I believe that this is the correct interpretation of the whole tax issue around Fairmont and DealFind’s current deal, but please leave me a comment below if you think otherwise. :)