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
I just discovered the overcharging of GST and PST on my recent Telus bill and found that it started around December after negotiating some discounts to my phone and internet bundle in late November. As I'd negotiated for discounts with Telus before, I was a bit surprised that this time I received in the mail, a multi-page "Customer Service Agreement" and "Order Summary" detailing the discount and credits they applied.
When I called Telus customer service, the rep I spoke to, after consulting with a manager (I assume), said the discounts are deducted from the total balance BEFORE taxes are calculated but credits are applied to the total bill AFTER tax is calculated. Doing the tax calculations for both PST and GST added up correctly using their new method but it is not the way tax was applied in the recent past where both taxes were calculated on the total bill AFTER discounts or credits were deducted.
The next day I contacted both the CRA and the BC Ministry of Finance to find out what's going on. The following is from the notes a wrote during my calls on Mar. 8/18 and I haven't yet done anything I've been advised.
CRA General inquiries directed me to their GST/HST Rulings Dept. 1-800-959-8287. The rep there said he can't give opinions on the way tax GST is applied by Telus as GST rules are complicated and suggested I FAX my inquiry, bill details, and Telus service agreement to 604-658-8666 with "Attention GST/HST Rulings" on the cover letter. He said It can take 45 bus. days for a reply.
I thought FAX was rather archaic and ask for an email address instead and was told they do not accept email inquiries unless you have a GST account, which I don't. The alternative he offered was to regular mail my inquiry and documents to:
9755 King George Boulevard
Write "Attention GST/HST Rulings" on the inquiry letter.
The CRA rep further stated that if I feel that a company is not complying with the tax laws of Canada, I can contact the LEADS dept. @ 1-866-809-6841 between 8:45-4:45 EST. He added however, that the LEADS dept. does not reply back with a report or decision. They will do an audit on the company in question if they feel it's necessary. So there is no transparency in their rulings.
When I called the BC Ministry of Finance (PST Dept.) @ 1-877-388-4440, the rep told me that I am not the 1st person to inquire about this PST tax issue by Telus. The ministry has had several people contact them and they are investigating to find out how Telus are applying the PST because they still don't know.
The BC Ministry of Finance rep said I can send an email (at the address below) about the issue to be placed on a list of complaints.
I can ask how PST is applied to charges on my bills and I can attach copies of my bills if I wish but it's not necessary. They will contact those on the email list after a decision is made.
When I asked if there had been any recent legislative changes to PST application rules, she said NONE regarding Telecommunications in the past few months.
So, very strange times we live in. I'll post again when I learn more about this issue.
Just noticed this tax issue on my April bill, but had been going on since last year.
I was recently offered a lower rate on internet and TV so that I wouldn't cancel and leave for Shaw. After some back and forth with customer service it appears the issue is with Telus's treatment of discounts. Apparently, Telus uses "credits" and not discounts to lower the monthly rate, which has tax consequences. Credits, like a store credit, are applied after taxes are calculated, while discounts are applied before taxes are calculated.
I asked Telus why they use "credits" and not discounts since it affects taxes paid by the customer, but has no apparent affect on them (ie, revenue should be the same for Telus) they couldn't tell me. The came up with some excuse that because I was given discounts previously that I could not be given discounts again. The other issue I brought up was that this was not mentioned during the offer. All Telus tells you is your new monthly rate, which a reasonable person would believe is what the taxes are based on.
Waiting to hear back from their L&R department to find out how to resolve this issue.
How Is GST/HST Charged on Volume Discounts?
For volume discounts, how you apply GST/HST to the sale depends on whether you offer the discount at the time you make the sale or after you make the sale.
For a discount offered at the time of sale, you charge GST/HST on the net amount (the sale price minus the discount). So for instance, if a customer bought ten dancing hula lamps that normally cost $100 each and you were offering a $10 discount on that item, you would charge the customer GST/HST on the net amount of $900 ($1000 minus the $100 discount).
Same situation, the $10 (or whatever amount) per month is a discount not a credit. It was offered at the time of the sale. Tax should be charged on the net amount. A credit might happen after the time of sale... for example if the customer was a long time customer and threatened to leave Telus, Telus offered a one-time credit of $50 off the next bill... even at that situation, whether to refund the GST on the credit is still complicated and not a definite answer.