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Old Aug 22, 12, 12:26 am   #1
 
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Why tax on WestJet Dollars?

I have noticed that WestJet charges me the full HST on the full price when I use WestJet Dollars - even when I pay the complete "base fare" with WestJet Dollars.

How come? I am actually getting a discount, I do not pay that part of the ticket. Why do I have to pay sales tax on something that is free for me?

My experience with other airline's loyalty programs was that they do not charge similar sales taxes on the free part of the ticket, but that was in other countries. Is there special legislation in Canada? Would Air Canada or Porter charge HST if I used their relevant points for a reward booking?

If not: Why is WestJet different?

(For clarification: I'm not talking about other taxes and fees, just about sales tax on the non-revenue part of the base fare that is "paid" with WestJet Dollars.)
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Old Aug 22, 12, 4:00 am   #2
 
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I am just guessing here but because your Westjet dollars account has a monetary value they must charge the HST even if the dollars you use are the ones you accumulated. In other airline programs they are points and they don't have a monetary value per se.
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Old Aug 22, 12, 8:11 pm   #3
 
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Originally Posted by Ace Cdn View Post
I am just guessing here but because your Westjet dollars account has a monetary value they must charge the HST even if the dollars you use are the ones you accumulated. In other airline programs they are points and they don't have a monetary value per se.
Actually, miles often do have a stated value, but a ridiculously small one. Like 0,01 Cent or so. :-) (Like a Pengö -> see Wikipedia for the fascinating and horrible story of that Hungarian currency)

The WestJet Rewards program terms say "Except as specifically provided in these terms and conditions, WestJet dollars have no cash value, and are not exchangeable for cash. WestJet dollars are not available for purchase."

While WestJet Dollars can have a value when buying tickets (if you have at least 25 of them or a WestJet credit card), the tax on this value has already been paid when these WestJet Dollars where earned. (Alternatively, WestJet could give a 1% discount right away which would result in a lower tax.)

Same is true for a lot of other voucher or points. When I eat six meals at Burger King, I get the 7th one for free. Cash value somewhere around $5-6 - and no tax will be charged on the free meal.

What if WestJet let us use the WestJet Dollars for free meals. Tax?
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Old Aug 23, 12, 12:59 am   #4
 
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Isn't it the same as using Canadian Tire money?
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Old Aug 23, 12, 10:55 pm   #5
 
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Originally Posted by TheGreatestX View Post
Isn't it the same as using Canadian Tire money?
Do they charge tax on their "money"?
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Old Aug 24, 12, 11:20 am   #6
 
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Quote:
Originally Posted by sokolov View Post
Actually, miles often do have a stated value, but a ridiculously small one. Like 0,01 Cent or so. :-) (Like a Pengö -> see Wikipedia for the fascinating and horrible story of that Hungarian currency)

The WestJet Rewards program terms say "Except as specifically provided in these terms and conditions, WestJet dollars have no cash value, and are not exchangeable for cash. WestJet dollars are not available for purchase."

While WestJet Dollars can have a value when buying tickets (if you have at least 25 of them or a WestJet credit card), the tax on this value has already been paid when these WestJet Dollars where earned. (Alternatively, WestJet could give a 1% discount right away which would result in a lower tax.)

Same is true for a lot of other voucher or points. When I eat six meals at Burger King, I get the 7th one for free. Cash value somewhere around $5-6 - and no tax will be charged on the free meal.

What if WestJet let us use the WestJet Dollars for free meals. Tax?
what I am saying is that in the ticketing transaction it is treating your Westjet dollars as currency similar to if you have money in you travel bank. So Sabre charges tax on that accordingly. It is the way the system is set up.
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Old Aug 25, 12, 10:19 pm   #7
 
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Originally Posted by Ace Cdn View Post
what I am saying is that in the ticketing transaction it is treating your Westjet dollars as currency similar to if you have money in you travel bank. So Sabre charges tax on that accordingly. It is the way the system is set up.
Ah! So you think it is not a question of Canadian tax law, but a simple matter of execution. Hmmm...

Interesting thought!
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