Understanding Promotion Tax in Canada
This information applies to any promotions in the following jurisdictions: Alberta, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Quebec, and Yukon.
How does DoorDash calculate tax on promotions?
DoorDash tax calculation system considers:
Who funds the promotion, and
The promotion type
These rules apply to:
The order subtotal, and
Delivery fees and small order fees on Self-Delivery orders
Who can fund a promotion on DoorDash?
DoorDash: DoorDash pays for the cost of the promotion
Merchant: You pay for the cost of the promotion
Third party: A third party pays for the promotion
Possible promotion types
Fixed amount: A set dollar discount (for example, "$10 off subtotal")
Still considered fixed even if the full amount isn't used
Variable amount: Any non-fixed discount (for example, "50% off" or "buy one, get one free")
Still considered variable even if capped
Funding Party | DoorDash | DoorDash | Merchant |
Promotion Type | Fixed amount $20 off subtotal | Variable amount 50% off subtotal "Buy one, get one free" | All promotion types |
Promotion Taxability | Tax is applied on the pre-discount price | Tax is applied on the post-discount price | Tax is applied on the post-discount price |
Examples of different promotion tax scenarios
Example 1: DoorDash funds a "$10 off subtotal" promotion
Funding party: DoorDash
Promotion type: Fixed amount
Tax treatment: DoorDash will collect tax from the customer and remit tax to the merchant based on the pre-discount subtotal price
Example 2: DoorDash funds a "50% off subtotal" promotion
Funding party: DoorDash
Promotion type: Variable amount
Tax treatment: DoorDash will collect tax from the customer and remit tax to the merchant based on the post-discount subtotal price
Example 3: Merchant funds a "$10 off subtotal" promotion
Funding party: Merchant
Promotion type: Fixed amount
Tax treatment: DoorDash will collect tax from the customer and remit tax to the merchant based on the post-discount subtotal price
Example 4: Merchant funds a "50% off subtotal" promotion
Funding party: Merchant
Promotion type: Variable amount
Tax treatment: DoorDash will collect tax from the customer and remit tax to the merchant based on the post-discount subtotal price
Viewing promotion and tax details in reports
Detailed financial and promotion information for each order is available in the Transactions report in the Merchant Portal.
Promotions funded by DoorDash
Discount field
Before 3/11: DoorDash funded subtotal discount amount (for historical reference only)
3/11 and after: Customer discounts from marketing (funded by DoorDash)
Pre-discounted subtotal passed to the merchant:
SUBTOTAL
Tax passed to the merchant:
Fixed amount promotions: Tax on the pre-discounted subtotal
Variable amount promotions: Tax on the post-discounted subtotal
Promotions funded by merchant
Discount field
Before 3/11: Merchant funded subtotal discount amount (for historical reference only)
3/11 and after: Customer discounts from marketing (funded by you)
Post-discounted subtotal passed to the merchant: SUBTOTAL
Tax passed to the merchant: Subtotal tax passed to merchant
Promotions funded by a third-party
Discount field
3/11 and after: Customer Discounts from Marketing | (Funded by a Third-party)
Pre-discounted subtotal passed to the merchant: SUBTOTAL
Tax passed to the merchant: Subtotal tax passed to merchant
Fixed amount promotions: Tax on the pre-discounted subtotal
Variable amount promotions: Tax on the post-discounted subtotal
Why is tax only collected on the post-discount subtotal for some promotions?
For variable amount promotions funded by DoorDash or a third party, DoorDash applies tax in accordance with:
Sections 181(4) and 181(5) of the Excise Tax Act, and
Sections 350.4 and 350.5 of An Act Respecting the Quebec Sales Tax
Under these rules, the discount amount is not considered consideration for a supply and is therefore not taxable.
How are co-funded promotions taxed?
Co-funded promotions are treated as separate promotions for tax purposes.
Example: If a $10 promotion is split evenly between DoorDash and the merchant, tax is calculated as:
One $5 DoorDash-funded promotion, and
One $5 merchant-funded promotion
If you have any questions, please contact Merchant Support.
Are there location-specific considerations for the US?
If your store is located in the US, refer to the US Promotion Tax article for country-specific guidance.
If you have any questions, please contact Merchant Support.
