Application of the GST/HST to Credit Card Surcharges

GST/HST Info Sheet GI-200

March 2023

This info sheet explains how the GST/HST applies to a credit card surcharge (as defined below) that is levied by a merchant at the point of sale when a customer chooses to use their credit card to pay for a purchase from the merchant.

Historically, the Visa and MasterCard credit card network rules did not permit merchants in Canada to add a surcharge to a credit card transaction. Those rules have now been amended to allow for such surcharging (except in Quebec where the Consumer Protection Act of Quebec applies).

Except as otherwise noted, all statutory references in this publication are to the provisions of the Excise Tax Act (ETA). The information in this publication does not replace the law found in the ETA and its regulations.

If this information does not completely address your particular situation, you may wish to refer to the ETA or relevant regulation, or call GST/HST Rulings at 1‑800‑959‑8287 for additional information. If you require certainty with respect to any particular GST/HST matter, you may request a ruling. GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, explains how to obtain a ruling or an interpretation and lists the GST/HST rulings centres.

If you are located in Quebec and wish to request a ruling related to the GST/HST, please call Revenu Québec at 1‑800‑567‑4692. You may also visit the Revenu Québec website at revenuquebec.ca to obtain general information.

For listed financial institutions that are selected listed financial institutions (SLFIs) for GST/HST or Quebec sales tax (QST) purposes or both, whether or not they are located in Quebec, the CRA administers the GST/HST and the QST. If you wish to make a technical GST/HST or QST enquiry related to SLFIs, please call 1‑855‑666‑5166.

GST/HST rates

Reference in this publication is made to supplies that are subject to the GST or the HST. The HST applies in the participating provinces at the following rates: 13% in Ontario and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%. If you are uncertain as to whether a supply is made in a participating province, refer to GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of Supply Rules for Determining Whether a Supply is Made in a Province.

What is a credit card surcharge

For purposes of this info sheet, a credit card surcharge is a fee that meets all of the following conditions:

For this purpose, the term “merchant”, in respect of a supply of property or a service, refers to the person (supplier) who actually makes the supply (e.g., the actual seller in the case of a supply by way of sale). The term also refers, where applicable, to an agent or auctioneer who makes the supply of the property or service on behalf of the supplier.

A credit card surcharge is consideration strictly for the merchant’s acceptance of the use of a credit card as a payment method. Therefore, if a fee is, in whole or in part, consideration for some other service (such as a web or telephone service) or for the use of property (such as an online payment platform), the fee is not a credit card surcharge.

A credit card surcharge is a fee that is imposed by (and is therefore the revenue of) the merchant who provides the property or service that is purchased with the use of the credit card. Therefore, if a fee that is tied to a credit card transaction is the revenue of a billing agent or payment service provider that only facilitates the payment transaction, the fee is not a credit card surcharge.

How the GST/HST applies to a credit card surcharge

Under the amended credit card network rules, a credit card surcharge must be disclosed to the customer before the transaction is completed and the customer must have the opportunity to opt out of using the credit card upon that disclosure, in which case the surcharge would not be payable. In this situation where a merchant allows a customer to use a credit card as a method of payment in return for the payment by the customer of a credit card surcharge, for GST/HST purposes, the merchant is viewed as providing a service to the customer that falls within paragraph (i) of the definition of financial service in subsection 123(1), which pertains to certain services relating to credit card transactions.

Under the GST/HST, a supply of a financial service is an exempt supply, unless it meets the conditions for being a zero-rated supply, which is a supply that is taxable at the rate of zero percent. In either case, no tax is payable on a supply of a financial service.

In certain circumstances, a charge for a financial service that is connected to the provision of other services or property is treated, for GST/HST purposes, as consideration for a separate supply of the financial service despite the extent to which the financial service and the other elements of the transaction are bound together. For example, this is generally the treatment in the case of a financing charge under an instalment sale contract for a sale of goods, provided there is a clearly identifiable amount imposed as a fee or charge solely for the financial service and that amount is disclosed and charged separately from other charges contained in the details of the transaction.

The situation in which a customer chooses to pay by credit card and thereby incurs a credit card surcharge is considered to be comparable to the situation in which a customer chooses to pay by instalment and thereby incurs a financing charge. In the case of a credit card surcharge, it will generally be treated as consideration for a separate supply of a financial service where it is shown and charged separately from the consideration for the property or service purchased with the use of the credit card and from all other fees or charges that may be payable by the customer. In that circumstance, the credit card surcharge will not be subject to the GST/HST.

GST/HST collected in error

If a supplier erroneously charges and collects an amount as the GST/HST on a credit card surcharge, the supplier must include the amount in calculating its net tax remittable. However, subject to certain conditions, the supplier may be entitled to claim a net tax adjustment if the supplier refunds or credits the amount paid in error to the purchaser. Alternatively, purchasers that have paid an amount as the GST/HST in error may claim a rebate of the amount using Form GST189, General Application for GST/HST Rebates. The time limit to apply for this rebate is two years after the day the purchaser paid the amount.

For more information, refer to GST/HST Memorandum 12-2, Refund, Adjustment, or Credit of the GST/HST under Section 232 of the Excise Tax Act, and Guide RC4033, General Application for GST/HST Rebates.

Further information

All GST/HST technical publications are available at GST/HST technical information.

To make a GST/HST enquiry by telephone:

  • for GST/HST general enquiries, call Business Enquiries at 1‑800‑959‑5525
  • for GST/HST technical enquiries, call GST/HST Rulings at 1‑800‑959‑8287

If you are located in Quebec, call Revenu Québec at 1‑800‑567‑4692 or visit their website at revenuquebec.ca.

If you are a selected listed financial institution (whether or not you are located in Quebec) and require information on the GST/HST or the QST, go to GST/HST and QST - Financial institutions, including selected listed financial institutions or:

  • for general GST/HST or QST enquiries, call Business Enquiries at 1‑800‑959‑5525
  • for technical GST/HST or QST enquiries, call GST/HST Rulings SLFI at 1‑855‑666‑5166

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