Tax on new phones

[CanadasPrincezz]

I have a question that I am hoping someone can help me with. I upgraded both mine and my daughters phones to the iPhone 12 Pro Max. I am wondering why I need to pay tax on the FULL price of the phone and not the amount after the Bring it Back deduction? I mean, I’m paying tax on a phone that I am giving back. It makes no sense and seems pretty sketchy and unfair. 

[Nighthawk · Accepted solution]

I don't know the exact reason but I'd assume part of it is that Telus had to pay the full tax on the phones when they bought them. On Telus' website the Terms state:

Terms and conditions

3. Subject to approved credit with a 24-month TELUS Easy PaymentⓇ agreement (0% APR) on any in-market plan with data and voice included. TELUS Easy PaymentⓇ balance will be repaid over a 24 month period via equal monthly payments. Payment of any outstanding TELUS Easy PaymentⓇ balance due upon termination, or account transfer. Applicable taxes are calculated based on the total no term price less any device discounts and must be paid in full at the time of purchase. Pay-per-use charges (including long distance, roaming and additional airtime or data) are extra. Device purchased on the Bring it Back program must be returned in good working condition or you will be responsible for the difference between the Bring-it-Back program amount and the lower trade-in value for a device that is not in good working condition. Trade-in standards published at the time a device is returned will apply. Applicable sales taxes are due at time of purchase on the full purchase price. You will not be charged tax on the Bring-It-Back Program Amount if you choose to keep your device and pay back the Bring-It-Back Program Amount at, or before, the end of the 24 month term. Bring-It-Back program is only available while you subscribe to mobility service. If mobility service is cancelled before the end of the term, the Bring-It-Back Program Amount will be charged to your TELUS bill.

[CanadasPrincezz]

Still doesn’t make sense to me. They get the phones back at the end.

[xray]

It's not like trading in your old car when you buy a new one. The bring it back program works like 2 separate transactions. You promise to sell your used phone to Telus in exchange for getting the bring it back amount up front. When you buy a new phone that's a separate transaction. Your bring it back money was given to you at completely different time than your purchase of the new phone. From CRA's perspective they are not the same transaction, 

[BillTelusCust]

Unfortunately, that's how it works.  The trade in is credited as money and does not affect the selling price of the phone.

Don't worry, the GST is remitted to the government so it can provide services to you and others in Canada.

[CJR]

With Bring it Back have to think of it as a reverse trade-in program where you are paying for the device but getting the initial expected trade value right away to lower your monthly costs vs paying a higher amount per month and then waiting until the end of your term to trade in the device.

Basically you’re just deferring payments for 2 years on the expected trade-in amount with the program which is why Canada Revenue requires the full taxes to be paid and then at the end of the term if decide to return the device it’s like you were trading it in, just you’ve already had the trade-in amount for the 2 years; and if the phone is destroyed, you decide to keep the device or if the TELUS Trade-in value is higher then the Bring it Back amount you have the option of paying back the initial Bring it Back value and opting to go for one of those options instead.

[CanadasPrincezz]

Thanks for the replies.