Pregnant Winnipeg woman charged PST on Toys 'R' Us baby item exempt from tax

Toys "R" Us is fixing a glitch on its website that was charging Manitobans PST on tax-exempt items after a pregnant Winnipeg woman contacted the CBC I-Team.
Toys "R" Us is fixing a glitch on its website that was charging Manitobans PST on tax-exempt items after a pregnant Winnipeg woman contacted the CBC I-Team. 2:01

A pregnant Winnipeg mother was surprised to find she had been charged PST on a stroller-car seat combo she bought online from Toys "R" Us.  

Lindsay Waters, who happens to be an accountant, noticed the $36.80 PST charge on the bill right away. The problem is car seats and strollers have been PST exempt in Manitoba since July 2013.

Waters called Toy "R" Us and was told it was an issue with the online ordering system. She was told by a man on the phone that she would get a refund.

Lindsay Waters discovered she was charged PST on a stroller/car seat combo. (CBC)

Waters paid $519.77 for the Graco Modes Travel System with Snug Ride Click Connect 35 Infant Car Seat. Toys "R" Us refunded the PST charge on her credit card within 10 days of her call.

"Well, I thought that's great, they obviously had no issue refunding me the amount that was owed to me, but I also thought it was a bit unusual because I had to call them. I had to notice that I was being charged for PST when I shouldn't have," she said.

Winnipeg woman charged PST on PST-exempt car seat/stroller combo. (CBC News Graphics)

'They could just fix the problem'

A month later, Waters checked to see if the company had fixed the glitch, but a PST charge still appeared on the same item. Waters doesn't believe that is acceptable.

In Manitoba, you might be surprised by how many baby items are PST-exempt. 0:55

"They have a variety of options." she said. "They could put a notice on their website to at least start funnelling some calls into their call centre to start processing some credits. Or they could just fix the problem."

Waters worries less diligent online shoppers might not have checked their receipts as closely and been erroneously charged PST.  

"My fear is there's probably quite a few," she said. "I just think of myself, all the online transactions I perform in a given month, and I think there's probably a lot of people who aren't noticing that they are being charged PST and not calling in, and that's money that should be in their pocket."

Agnes Raya reported the same problem to Toys "R" Us a year ago. The Winnipeg mother was charged the sales tax on numerous exempt baby items and said she even filed a complaint with head office in Canada.

"They are fully aware they are charging the taxes, because they had to be adjusted," Raya said.

After reading the I-Team story, she sifted through her receipts and found more baby items that should have been tax exempt from Toys "R" Us and Future Shop. 

"The fact that this has been going on for so many years, they have a lot of bookkeeping that they have to go back on," Raya said. "I'm going to call them and find how I'm overcharged and get my money back."

The CBC I-Team contacted Toys "R" Us. In an email, the company said it's aware some baby products are exempt from the provincial sales tax. It said the problem was a technical error and it would be fixed within two weeks.

Toys "R" Us said it would identify additional affected customers and refund the PST charge. It asked anyone who may have been affected to come forward and the company apologized for any inconvenience to customers.

PST exempt

In July 2013, Manitoba made a number of products for children under 24 months of age PST exempt. The exemptions cover infant necessities such as nursing and feeding supplies, safety items, strollers, diaper and toilet training supplies and bathing and grooming products. It doesn't include toys, decorative furniture and other unessential supplies.

Manitoba made a number of items PST free for children aged 2 and under. (CBC News Graphics)

Last year, the province investigated 67 complaints related to PST non-compliance. It resulted in $111,386 in fines and $990,716 in penalties. So far this year, it has investigated 87 files resulting in 47 convictions.

Manitoba Finance said it doesn't receive many complaints about tax misapplication but if it does, it works with the retailer to correct the problem. It didn't say whether it had received a complaint about the Toys "R" Us website.

Toys "R" Us said it did not benefit financially from charging the PST.

"We can assure our customers that there was no financial benefit to Toys "R" Us Canada from this error as all tax collected has been remitted to the Manitoba government," said Tamar Nersesian, Toys "R" Us manager of PR and special events.

"We are working on a solution on our e-commerce site and it will be fixed within two weeks. In addition, Toys"R"Us, Canada will be posting information on our website so that customers can contact us if they believe they have been incorrectly charged provincial sales tax on the specified baby products."

 As for Waters, she just wants parents to keep a closer eye on their receipts.

"I wanted to make sure that other parents out there knew that if they are looking at purchasing some of these baby items, to know which ones are tax exempt and to make sure to check their receipts so that they can get their refund."

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