When do you or do you not pay taxes when using coupons?

[mjlk101]

Do we always have to pay taxes even if we use coupons? I never really paid attention to the wording on the coupons about taxes. What about fpc coupons...does it cover the tax too?

[paylessgetmore]

When I use FPC coupons for taxable items, I do carefully read the wordings on coupons. If it says "GST, PST, HST is included in the face value of the coupon", I will mention it to the cashier and try to fight for it if cashier is kind of unwilling. In the end, I will buy it anyway if I really really need it, if not, I just return it to the cashier. I am just following what coupons say.

[--Becks--]

According to the federal govt's GST/HST technical information bulletin on coupons, you do not paying GST/HST when you redeem free product coupons:

"Other types of coupons:
Coupons that are not for a specific single monetary discount will be treated in the same way as coupons that do not include the GST. These coupons will reduce the selling price of an item before the GST is calculated.... Therefore, retailers will deduct the value of the coupon from the selling price prior to calculating any GST payable.
These coupons may:

• offer a certain percentage off the price of an item (for example, a coupon to receive 10% off the next purchase);
• offer an item for no charge if another item is purchased (for example, two-for-one coupons);
• contain more than one monetary discount (for example, 50 cents off a 250 ml bottle of pop, or $1 off a 500 ml bottle of pop); and
• be used for goods and services that are taxable, as well as zero-rated or exempt."

If you are looking for PST law re: coupons, I believe you'll need to search the internet. I believe I found it for BC before when I had to argue my case with Safeway.

I remember using coupons that were "buy 1 get 1 half off" and thinking that the cashier would probably charge tax on the "half off" portion, and that it would be a hassle to argue it.

If you go to Shoppers Drug Mart, they have a section in their cash register area for processing free product coupons. At the cosmetics register, there's a keyboard button for "coupons", then they look on their screen and choose "manufacturer", and then they look at the bottom of their screen and choose the "free product" option.

If you are using a manufacturer's coupon that is eg. $1 off, you will pay taxes on that coupon value.

[--Becks--]

Also, if you are using a store coupon (as opposed to a manufacturer's coupon), there is no tax on the store coupon because it's value is first deducted before tax is calculated.

An example of a store coupon would be Superstore's coupon zone coupons. Note: London Drugs' coupons indicate there is tax on them.

[mjlk101]

Thanks paylessgetmore & becks. I am going to redeem a fpc soon and wanted to make sure if I pay taxes or not

[freebienewbie]

Thanks. I tried fighting it once and they said no. The wording was a little weird

[--Becks--]

Thanks. I tried fighting it once and they said no. The wording was a little weird

Here is an archived link from the Ontario Ministry of Finance discussing coupons and the RST (valid before the implementation of the HST in Ontario). Even back then, you did not have to pay the RST on free product coupons:

"A coupon that is issued by either a retailer or a manufacturer may provide for taxable merchandise to be given free of charge, with no requirement to purchase other merchandise. The person presenting the coupon is not required to pay RST on the free merchandise."

So, now that Ontario follows the HST rules, it still remains unchanged that you don't pay taxes on free product coupons.

[mjlk101]

Here is an archived link from the Ontario Ministry of Finance discussing coupons and the RST (valid before the implementation of the HST in Ontario). Even back then, you did not have to pay the RST on free product coupons:

"A coupon that is issued by either a retailer or a manufacturer may provide for taxable merchandise to be given free of charge, with no requirement to purchase other merchandise. The person presenting the coupon is not required to pay RST on the free merchandise."

So, now that Ontario follows the HST rules, it still remains unchanged that you don't pay taxes on free product coupons.

I have to check if it's the same in BC otherwise I will wait for Superstore's no tax day.

[paylessgetmore]

I have to check if it's the same in BC otherwise I will wait for Superstore's no tax day.

Yes, that will be my another option to wait for RCSS no-tax event before coupon expires.