Reconciling Invoice Surcharges

This page is for accountants and bookkeepers reconciling a Runars invoice that includes a Card Surcharge line. It explains what the surcharge is, why it carries no GST/HST, and how to record it.

1. What the surcharge is

When a payment is made by credit card, the card networks charge the merchant a processing fee. Runars passes this fee through as a separate Card Surcharge line rather than building it into prices. It applies only to credit card payments — bank transfers and other methods carry no surcharge.

• The rate is 2.4% for CAD cards and 3% for USD cards, capped at the card network's technical maximum for the card used.
• The surcharge is disclosed before payment is completed, with the option to cancel — as required by the card network surcharging rules.
• It appears on the invoice as Card Surcharge (2.4%) with its own line under the tax line. If a payment processed without a surcharge (for example, where surcharging isn't permitted, such as Quebec-issued consumer cards), the invoice simply has no surcharge line.

2. Why no GST/HST applies to the surcharge

A credit card surcharge charged by a merchant is consideration for a financial service — specifically a service within paragraph (i) of the definition of "financial service" in subsection 123(1) of the Excise Tax Act. The Canada Revenue Agency sets out this treatment in policy statement GI-200, Application of the GST/HST to Credit Card Surcharges.

Supplies of financial services are exempt under Schedule V, Part VII of the Excise Tax Act (or zero-rated under Schedule VI, Part IX in certain cases, such as supplies to non-residents). In either case no GST/HST is payable on the surcharge — which is why the surcharge line on a Runars invoice has no tax added to it, while the underlying API credits subtotal does.

3. How to record it

Reconcile the invoice as you would any supplier invoice, then book the surcharge separately:

1. Record the expense as usual. Code the API credits subtotal to its normal expense account, and record the GST/HST shown on the tax line so the full input tax credit (ITC) is claimed on your return.
2. Track the surcharge as a bank fee. The surcharge line is non-taxable, so it carries no GST/HST and no ITC. Code it to an account such as Bank Fees or Card Processing Fees (in QuickBooks: an expense account, tax code Exempt/Out of scope).
3. Match the payment total. The amount that cleared your card equals subtotal + tax + surcharge, which is the invoice Total.

4. Worked example

For an invoice showing $50.00 of API credits, $6.50 HST (13%, Ontario) and a 2.4% card surcharge:

5. Common questions

My invoice has no surcharge line — do I do anything different?

No. The payment processed without a surcharge, so the invoice is a plain subtotal + tax reconciliation.

We're not GST/HST-registered

Record the invoice Total as cost: the credits expense plus the surcharge as a bank fee. No ITC arises on either the tax line (you can't claim it) or the surcharge.

Why is the surcharge a separate line instead of being in the price?

Card network rules require the surcharge to be disclosed separately before payment, and it keeps the accounting clean: the underlying service price stays the same regardless of payment method, and the non-taxable fee doesn't blur the taxable base your ITC is calculated on.

6. Scope

This page describes Runars' invoicing practice and the general Canadian GST/HST treatment of merchant card surcharges, with references to CRA guidance. It is general information, not tax advice for your specific situation — confirm the treatment with your accountant or advisor. Questions about a specific invoice can go to support@runars.ca.