By Bashar Qawas
For operators, accounting can be a challenging part of the job and understanding the ins and outs of deposits can be complicated. For example, when you open your bank feed and spot a deposit from a delivery platform, it may look like a sale, but it is not. By the time that money reaches your account, commissions, service fees, refunds, promotions, and other adjustments have already been deducted. If the deposit is being recorded as revenue in your books, there is a good chance your financial reporting is telling the wrong story.
On the surface, nothing looks wrong. Yet behind those tidy reconciliations, revenue, expenses, and profitability can all be significantly misstated.
The first consideration
Before looking at the bookkeeping, there is a more fundamental question to answer: who is actually making the sale to the customer?
The answer depends on whether the delivery platform is acting as your agent or as the principal.
If the platform is acting as your agent, the sale to the customer is your supply. You account for the GST/HST on the food you supplied before the platform’s commission is deducted. Importantly, this applies to the food—not necessarily to every charge the customer sees on the order. The platform’s own delivery and service fees generally relate to its supply, rather than yours.
If the platform is acting as the principal, it is buying from you and reselling to the customer. In that case, the sale to the customer belongs to the platform. Your transaction is instead the supply you make to the platform, which has its own GST/HST treatment and needs to be properly identified.
The CRA’s approach to determining whether an arrangement is one of agency or principal is outlined in Policy Statement P-182R. The contract is an important starting point, but it is not the entire answer. The actual conduct of the parties, their authority, and the degree of control over the agent’s actions can also matter. Where the arrangement is genuinely unclear, the CRA’s guidance points operators toward seeking a ruling or interpretation.
And there is an important practical point here: the same restaurant can have different arrangements with different delivery platforms.
So, if you use three delivery apps, you cannot assume that all three deposits should be treated the same way simply because they look identical in your bank account.
What the net deposit actually costs you
On the simplest of orders, recording the net does not change your bottom line. But a payout is rarely that simple: refunds, chargebacks, promotional funding, tips, and tax move through the same deposit, and leaving those unrecorded can affect profit, liabilities, and what you remit.
The main difference exists as a deducted commission, and net-recording understates sales, hides that commission as a cost, and usually inflates the margin percentage. More complex payouts can distort the picture in either direction: book a deposit containing tips wholesale as revenue and you overstate the sales instead.
Either way, the operational questions get more complicated: what commission rate am I actually paying, per platform, this quarter? What is my contribution margin on a delivery order versus the same item in the room? Those are answerable from the settlement reports, rather than from a bank feed.
There is also the input tax credit to factor in. The commission a platform charges you to supply to your business, and when you are registered and using it in commercial activity, the GST/HST is generally recoverable. But if the commission never entered the books, you may have missed that credit.
Two caveats worth knowing: input tax credits (ITCs) require supporting documentation, and operators using the Quick Method generally cannot claim ITCs on operating expenses.
So, a bank reconciliation may balance perfectly while the financial statements are still wrong.
Your settlement report should be the starting point
The better approach is to work from the platform’s settlement or remittance report – not from the amount that lands in the bank.
For each payout, identify what each amount represents and whether it belongs in your accounts. Depending on the platform and arrangement, that can include:
- Gross food sales
- GST/HST shown separately
- Commission charged to you
- Platform fees charged to the customer
- Refunds, chargebacks and order adjustments
- Promotional discounts, including whether they were funded by you or the platform
- Tips and whether they are passed through to staff
- Marketing or advertising charges included in the payout
This is particularly important with refunds and promotions.
They often move in the opposite direction from the original sale and may not appear in the same settlement period. That makes them easy to miss when you’re trying to reconcile deposits based only on what appears in the bank.
Once you’ve identified the individual components, record your own sales and expenses separately for each platform. The bank deposit should then be the result of the accounting, rather than the starting point.
Under an agency arrangement, for example, that means recording your gross food sales and the commission charged against those sales.
Under a principal arrangement, it means recording the supply you make to the platform.
In either case, the platform’s own customer fees should not simply be added to your restaurant revenue.
What if you’ve been doing it wrong?
If previous periods were filed using the wrong basis, don’t simply start using a new method and move on.
Where tax was underreported, or a period was reported incorrectly, the affected reporting period needs to be adjusted through the appropriate CRA process. Do not file a second return for the same period.
Missed ITCs are generally a more straightforward situation. Eligible ITCs that were not claimed can generally be claimed on a later return, subject to the applicable time limits and documentation requirements.
The best place to start is by going back to the settlement reports and reconciling each affected period.
Keep the supporting documentation, identify exactly what was reported incorrectly, and obtain qualified GST/HST advice before making adjustments or filing anything with the CRA.
The bottom line
A delivery-platform deposit may be what you see in your bank account, but it is not necessarily the sale you made. The difference matters.
Recording only the net deposit can hide commissions and expenses, distort your margins, affect GST/HST reporting, and make it much harder to understand whether your delivery business is actually profitable.
The good news is that the solution is relatively simple: follow the settlement report, not the bank deposit.
Understand who is making the sale, separate the different components of each payout, record your revenue and expenses properly, and let the net deposit become the result of the accounting—not the accounting itself.
For restaurant operators, that extra level of detail isn’t just about keeping the books clean. It gives you a much clearer picture of what your delivery business is really costing you – and what it’s really earning you.
Bashar Qawas is a partner at Better Books Canada and a former Canada Revenue Agency auditor.
