In light of their treatment under International Accounting Standard (IAS) 2, "Inventories," and Emerging Issues Committee (EIC) Abstract EIC-144, "Accounting by a Customer (including a Reseller) for Certain Consideration Received from a Vendor," may volume rebates received or receivable by food wholesalers from suppliers be applied to reduce the cost of the purchased food inventory, or must they be included in income? CRA responded (TaxInterpretations translation):
Discounts generally are received by the taxpayer at the moment of purchase as a reduction in the price payable by the taxpayer and do not represent income to it.
In contrast, rebates paid or payable after the purchase constitute revenue to the taxpayer. Thus, a rebate which is not provided at the moment of purchase, and which depends on a future event, must be taken into account in computing income under subsection 9(1).
If discounts or rebates are considered to be amounts received by a taxpayer in order to earn business or property income, we are of the view that paragraph 12(1)(x) could apply ... .