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Since October/November of 2017 Telus has been overcharging for taxes (in BC).
Clearly, when a company advertises a service/product at $aaa dollars and then sells at $bbb dollars, the taxation amount is calculated on the sold value ($bbb). If a company advertises a service at $100, sells to you at $50 (discounted), they must calculate tax on the sale amount ($50). This is clearly stated in the taxation bulletins below. Telus is wrong. The quickest way to a remedy is to contact your MP/MLA (elected government person) and tell them this is a serious matter that you want assistance with.
General Information for GST/HST Registrants, page 48
Promotional Materials and Special Offers, page 5
While I am not an expert in tax laws, my thinking on this is that it is not so black and white. It has to be more complex than that. When a company advertises an item on sale, for example from $100 to $70, then of course they will charge tax on $70. However, if the same company issues a coupon for $30 on that specific item, the tax will be on $100 and 30 will be treated as cash--with the net value in Alberta being $75 and not $73.50.
When Telus advertises a service for say $50 for the first 6 months and $80 ongoing, I am sure they charge GST on $50 for the first 6 months and on $80 after that. Complication(that we are talking about in this thread) arises when a customer bargains for a better rate and the L&R agent subsidizes the monthly rate from $80 to $50, then they consider it as a promotional dollar equivalent to a coupon. Thus they charge GST on the full rate and subtract the promotional amount($30 in this example) and that is where the discrepancy arises.
Obviously, I am not speaking on behalf of Telus here but in my case the above math agrees with the taxes as I have had some discount on my TV and Internet services. Now, I must also note that this wasn't always the case. Up until August of 2017, the taxes always matched the exact amount of dollars you were charged. Something changed around that time and this is the new reality. I am not sure if it is across the board or has affected only those who made changes to their accounts during July-September 2017 period.
This change became prevalent in the autumn of 2017. One of their representatives, posting here, claims it was an accounting problem internally. Another representative, reached by telephone, claims that the government directed them to make a change to tax calculations. In the latter case, he was ambivalent about particulars -- is it all governments in each jurisdiction Telus operates in, the federal government only, a particular provincial government? There was no effort by the latter representative to provide any government issued documents, or reference to, that would support the claims made by Telus: "the government directed us".
This whole scenario smells much like certain cell phone provider claims of years past that clients needed to pay a "network access fee" (aprox $8) each month. Further, some of them claimed that it was a fee demanded by "the government". It was proven that the charge was merely another layer of fees that the service provider applied, without any mandate by the government. The monies certainly were not a tax that was forwarded to the government.
The governments at both levels state tax calculations should be based on the reduced/discounted/final price the customer pays. If the supplier/vendor wants to monkey around with GST input tax credits, they can choose their method of accounting, but the client/customer cannot be made to pay tax on the fictitious, inflated portion of the advertised price.
I think Telus, and anyone else attempting to calculate and charge taxes on an amplified, advertised service price, is skating on thin ice.
To TMc... I suggest that you take this to the elected representative for your area. There must be thousands of people affected and millions of dollars in play here.
The methods used to calculate are clearly outlined in the tax bulletins.
Charging tax on a high retail price, while really selling at a lower, discounted price is not the proper method for sales tax calculation. Could you fathom the outrage if car dealerships said, "well, the sticker price is $40,000, we charge tax on $40,000, but we'll sell you the car for $34,800"?
Just got my February bill and once again it is a mess...reps are no longer hiding it anymore perhaps a memo went out.
Full Taxes (12% in my case) are indeed being charged BEFORE any discount credits on account are applied which in my opinion is a load of garbage but I guess it must be legal assuming CRA is aware of their practices.
This is INCORRECT.
"Loyalty credits" added to your bill include applicable taxes. Check your paper bill... you will see a * next to the credit, and the footnotes confirm that it includes tax.
One example provided on this board was from a consumer who thought the credits they received from TELUS cut their bill in HALF. So, if their bill was previously $160, they were expecting a new bill of $80. If that consumer is in BC, the value of the credit was actually $71.43. The other $8.57 is sales tax. So, instead of passing on the savings to the consumer, the Provincial and Federal government tax revenue is protected.
If that consumer's bill was actually reduced to $80, they'd only be paying $9.60 in sales taxes, but they're continuing to pay $19.20 each month. That is $115.20 every year, which would pay for more than a month of your TELUS bill.
Why does TELUS process these customer loyalty tactics in a way that protects revenue for the Government? Who knows. But, I just had my Rogers Wireless monthly plan reduced from $105 to $85. I pay taxes based on the lower amount.
Curious has anyone tried a CCTS complaint regarding this "new" tax practice...have some extra time myself doing one right now.
**UPDATE** Not the response I was hoping for
Thank you for contacting the Commission for Complaints for Telecom-television Services (CCTS). The CCTS is an independent agency with a mandate to receive, facilitate the resolution of, and, if necessary, resolve eligible customer complaints relating to certain retail telecommunications and retail residential subscription television services.
The scope of the CCTS' mandate is set out on our website: http://www.ccts-cprst.ca
Unfortunately, this matter is not an eligible complaint within the meaning of our Procedural Code and is therefore not within the scope or mandate of the CCTS.
We have reviewed your complaint about how the taxes are being applied on your account. It is our assessment that the subject-matter of your complaint relates to general operating practice(s)/policy matters. Further to Section 4.3 of our Procedural Code, the CCTS is not able to issue Recommendations and Decisions that directs or requires a service provider to change their operating practices and policies.
Therefore, the CCTS cannot process your complaint. The Procedural Code can be found at: https://www.ccts-cprst.ca/codes-stats-and-reports/procedural-code/
We have forwarded your complaint to your PSP for their information.
If you have any questions or concerns regarding your complaint, or anything contained in this correspondence, please do not hesitate to contact us.
P.O. Box 56067 Minto Place RO
CCTS Assessment Team