Giftcard Question.

[mmmken]

Hey all,

I was interested in purchasing some giftcards from the BST forum, and was wondering if the taxes are already paid for them?

So if I wanted to buy an item at $100, would they deduct $100 from the GC, or $115?

[gman]

Hey all,

I was interested in purchasing some giftcards from the BST forum, and was wondering if the taxes are already paid for them?

So if I wanted to buy an item at $100, would they deduct $100 from the GC, or $115?

There is no tax for buying gift card. They will deduct $100 + tax.

[DaTrader]

Hey all,

I was interested in purchasing some giftcards from the BST forum, and was wondering if the taxes are already paid for them?

So if I wanted to buy an item at $100, would they deduct $100 from the GC, or $115?

Buying a gift card or paying with a gift card is like buying or paying with cash.
So a $100 gift card will equate to $100 payment on your purchase

Item Price + tax = Final Price - $100 gift card (and you need to pay the rest with any other means).

If final price is less then $100, you then carry a balance of your card for next purchase.

[mmmken]

Buying a gift card or paying with a gift card is like buying or paying with cash.
So a $100 gift card will equate to $100 payment on your purchase

Item Price + tax = Final Price - $100 gift card (and you need to pay the rest with any other means).

If final price is less then $100, you then carry a balance of your card for next purchase.

I hate to question you, but are you absolutely sure? I thought you paid taxes when buying the gift card at the store, and you didn't need to pay the taxes when using the gift card (since it was already taken care of).

I remember awhile back, I was given a $50 Walmart gift card. I used it, and they didn't charge me taxes.

Right now, I'm considering getting some Best Buy GC's from the BST forum. If the taxes were already taken care of by the original purchaser, I'd be willing to go through the hassles of getting a GC.

It makes much more sense this way, since a gift card purchase is - indeed a taxable purchase. More money for Best Buy would be in their interest, so why not tax at gift card purchase? But hey, if I'm wrong - I'm wrong.

[dmxlite]

I hate to question you, but are you absolutely sure? I thought you paid taxes when buying the gift card at the store, and you didn't need to pay the taxes when using the gift card (since it was already taken care of).
...
It makes much more sense this way, since a gift card purchase is - indeed a taxable purchase. More money for Best Buy would be in their interest, so why not tax at gift card purchase? But hey, if I'm wrong - I'm wrong.

Um.... you're wrong? :D

Does this make sense? You put $100 on a Safeway giftcard. You buy $100 worth of groceries, which are exempt from taxes. Wait a second, you basically paid tax on things that shouldn't be taxed! Things get even more confusing when you mix taxable, and tax exempt items. (OK, BB doesn't sell groceries, but you get the idea)

Technically, you're not buying anything. To the store, the card itself has no monetary value. You are just putting money on the GC for a latter purchase. That is, the GC has a balance, but the physical card, itself, has no value -> so you're not purchasing anything. When you use the card, tax is calculated on the item you purchase, and not on the value of the giftcard:
COST OF ITEM + TAX - GC VALUE = FINAL PRICE

[gman]

I hate to question you, but are you absolutely sure? I thought you paid taxes when buying the gift card at the store, and you didn't need to pay the taxes when using the gift card (since it was already taken care of).

I remember awhile back, I was given a $50 Walmart gift card. I used it, and they didn't charge me taxes.

Right now, I'm considering getting some Best Buy GC's from the BST forum. If the taxes were already taken care of by the original purchaser, I'd be willing to go through the hassles of getting a GC.

It makes much more sense this way, since a gift card purchase is - indeed a taxable purchase. More money for Best Buy would be in their interest, so why not tax at gift card purchase? But hey, if I'm wrong - I'm wrong.

When you buy gift card, you do not pay tax buying it. I don't know how many times I bought gift cards so far, probably around 100 times including Walmart.

I never pay tax for buying gift card. It is NOT a taxable purchase. So yes, I am 100% sure.

You either paid tax in the gift card and you don't know about it or what you bought was not taxable such as buying a box of cereal.

[myversa]

I did get taxed when I used my Ikea, FS, and BB giftcards.

[crimsona]

When buying a gift card, you are not taxed.
When using a gift card, you are taxed.

[felix]

When buying a gift card, you are not taxed.
When using a gift card, you are taxed.
That is correct.


Example :

You are buying a $100 gift card from a retailer, you pay $100 (most accept credit card, cash, basically any payment method same as merchandise).

You are buying a $100 gift card from a seller on BST forum, at say 10% off you pay $90 cash.

You are using a $100 gift card at a store. The merchandise you want to purchase is $99.99 + tax. Your total comes to $113.99, you can use your $100 gift card, and the remaining $13.99 with cash, credit card, debit, etc.


Hope this helps.

[Octavius]

That is correct.


Example :

You are buying a $100 gift card from a retailer, you pay $100 (most accept credit card, cash, basically any payment method same as merchandise).

You are buying a $100 gift card from a seller on BST forum, at say 10% off you pay $90 cash.

You are using a $100 gift card at a store. The merchandise you want to purchase is $99.99 + tax. Your total comes to $113.99, you can use your $100 gift card, and the remaining $13.99 with cash, credit card, debit, etc.


Hope this helps.

Felix is absolutely right. When you buy a gift card, no goods and/or services have been rendered to you yet (well, except the gift card, but for our purposes that doesn't count). Basically you're giving them your money now and they are promising you can use it later when you want to.

Only after you buy something (not a gift card) are you taxed. If you are paying tax on Gift Cards AND on goods/services, I'd report that to the CRA. The company in this case is collecting twice as much taxes as it should be if they are doing this (but I have yet to see any place do it).