Tax treatment of credit card surcharges for dealers in Canada

We now offer the option for dealers to pass along credit card fees to their customers through our credit card surcharge feature. This gives you, the dealer, the ability to recover credit card processing costs associated with transactions on the platform.

Please note TOOLBX does not calculate tax on credit card surcharges. Dealers are responsible for determining and remitting the correct tax amount for transactions with credit card surcharges.

As a general rule of thumb, credit card surcharges are considered a supply of a financial service, which is an exempt supply, unless it meets the conditions for being a zero-rated supply. In either case, no tax is payable.

Dealers should ensure the legality of charging credit card surcharges within their jurisdiction and industry. Dealers are responsible for understanding and complying with the tax treatment of credit card surcharges within the Canadian sales tax framework. Consult with your accountant or tax advisor to ensure accurate tax calculations and compliance with all tax obligations.