Does Costco Canada charge tax on the full price before the Instant Savings?
After taking a trip down to Washington State not too long ago, I noticed some text on the bottom of each price marker that stated,
“Sales Tax may be due on all or part of pre-discount price.”
That same week, I received the Executive Member Coupon booklet, where I saw this statement in the Terms and Conditions of each coupon,
“This is a manufacturer’s coupon; all applicable taxes will be based on selling price prior to discount on the coupon.”
This got me wondering how taxes were charged in Costco Warehouses in Canada when an item went on sale. Unfortunately, (and I keep all my Costco receipts) I have never been able to escape a trip to Costco with only one sale item. My large, multiple item receipts that I usually leave with were too complicated to decipher how tax was being charged on my purchases.
After a couple one item trips to Costco, I can finally confirm that the answer to “Does Costco charge tax on the full price before the Instant Savings?” The answer is – IT DEPENDS.
Whether or not tax is charged on the full price before discount depends on the type of rebate.
- INSTANT SAVINGS – Tax will be only be charged on the discounted price.
- EXECUTIVE MEMBER COUPONS – Tax will be charged on the selling price prior to the discount
I have attached the receipts of some of my latest purchases I made so you can see for yourselves!
The fact that the Executive Member Coupons charge tax on the full price before the discount decreases the value of these coupons. For example, the month before the Executive Member Coupons were valid, Bounty Paper towels were on sale for practically the whole month of March. If you purchased the Bounty Paper Towels during the “Instant Savings” you would have paid $17.91 after tax (in BC). If you purchased the Bounty Paper Towels using the Executive Member Coupons, you would have paid $18.39 after tax (in BC). The difference in this price is $0.48. Essentially this take the coupon value from $4.00 off to $3.52 off.
If you are a regular visitor to this blog, you will know that many of the items you find in the Executive Coupon Booklet go on sale on a regular basis. If you can plan your purchases to coincide with the Instant Savings you will save yourself a little bit of money. With gas prices the way they are headed this summer, every dollar helps!
Happy Shopping Everyone!
it seems to me that the value of a costco membership has been steadily decreasing over the past few years. Anyone disagree? I’m also tempted to downgrade after reading this, the earlier comments, but also after going through the executive coupon booklet with its narrow(er?) window of use before expiry. what a joke!
Most times coupon booklets are almost exclusively P&G products most of the time… And ther are fewer kirkland signature items available than there used to be (eg where are their Lysol equivalent wipes they used to do in those pouches, not tubs?). The one staple item of ours would be the Newman’s Own sauce. The watery tasteless brands of tomato sauce they have in its place are terrible and terribly overpriced!
On the other hand this blog is a lifesaveer and helps me squeeze a bit more value out of membership given the ever rising annual fee…
Thanks Tyan for this info. I had no idea! This makes going executive even less attractive, but I did just renew my executive membership anyways…
Thanks for the info. Sneaky..maybe, but each coupon states it’s a manufacturer coupon and the way it works. Costco is just the messenger. This coupon booklet was exceptional because a lot of the Kirkland products are rarely on sale.
It depends on what kind of coupon it is. A manufacturer coupon, then they need to base the tax on the pre-rebated amount. This is clearly written on the Canada Government website: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/charge-gst/charge-gst-hst.html. I also have mentioned this several times on RFD where this comes up every single time and people get really upset:
Reimbursable coupons
Reimbursable coupons are usually called manufacturers’ coupons. They entitle the customer to a reduction of a fixed dollar amount on the purchase price. Vendors can expect to be reimbursed an amount by the manufacturer or another third party for accepting these coupons from customers. The value of the coupons includes the GST/HST when used to purchase taxable supplies (other than zero-rated supplies).
When you, as a vendor, accept a reimbursable coupon from a customer, you treat the coupon the same as cash. If the purchase is subject to tax, you charge the GST/HST on the full price of the item and then deduct the value of the coupon. We consider you to have collected a portion of the GST/HST equal to the tax fraction of the value of the coupon.
The tax fraction for the GST is 5/105, and the tax fraction for the HST is:
13/113 where the rate of 13% applies
14/114 where the rate of 14% applies
15/115 where the rate of 15% applies
For example, a coupon for $1 off the selling price includes:
5¢ for the GST ($1 × 5/105)
12¢ for the HST ($1 × 13/113) where the rate of 13% applies
12¢ for the HST ($1 × 14/114) where the rate of 14% applies
13¢ for the HST ($1 × 15/115) where the rate of 15% applies
The manufacturer reimburses you for the coupon value of $1, which includes the GST/HST.
Thank you so much for reporting this info! I’m disappointed that Costco does this – it seems sneaky…
Thanks for the investigative work and info!!
Sneaky… but I guess it is legal. It’s more buyer be aware.
This great information. Thank you for taking the time to let us all know.
Thanks for this info. It’s definitely something to consider on the larger items.
Isn’t it odd that the tax lumps together on two of those receipts, but the middle one shows each tax separately (as is legally required when charging more than one type of tax). The date format is different on that middle receipt too! Weird!
It makes a person wonder how much your really saving on your exec. Membership against reg especially for seniors or just couples. Going to drop my exec membership for an extra 60.00 down to reg
Your amazing! Thx so much for this page!
Hi, Good morning,
I went to US Costco last week, I have bought over US$200 over, I did not check the receipt.
Thank you for telling me, next time I will check. I have paid cash, so I did not keep the
receipt.
Thank you for heads up on this.
This is really helpful info. I have definitely noticed equal or close to equal sales before or after executive coupon time that made me go hmmmmmm… I barely use the coupons anymore.
That’s what I mean. I didn’t know before and it is also handy to know if you pick up stuff for other people and have to figure out what they have to pay.