Acme Video Inc. v. The Queen,  GSTC 49 (TCC)
Late return charges made by a video rental store operator did not represent charges for late payment and, therefore, were not covered by s. 161.
GST Memorandum 300-7-8 Early/Late Payments 11 February 1991
Discount for early payment
10. The following is an example of how the general early payment discount would work. A supplier invoices a customer for $50 and on the invoice the supplier wrote "Take four per cent off the price shown if payment is made within 30 days of purchase". Tax is payable on $50 even if the customer took advantage of the offer and only paid $48.
11. To illustrate the exception to the general rule, a customer receives an invoice with instruction to pay $108 if the payment is made by March 23, or to pay $118 if payment is made after March 23. The GST would be payable on the reduced invoiced amount of $108 even if payment is made after the March 23 due date.
Penalty for late payment
13. Where consideration is payable pursuant to an invoice and the invoice includes a clause which stipulates that an additional amount will be charged if payment is not received within a reasonable period specified on the invoice, then pursuant to section 161 of the Act, the consideration due is deemed to be the amount of the consideration for the supply shown on the invoice. The tax will be payable on the value of the consideration shown on the invoice whether or not the penalty is imposed for late payment.
14. For example, a customer receives an invoice for $200, and on the invoice the supplier has included the clause, "If payment is not made within 30 days of purchase, two per cent of the amount shown on this invoice will be added for each 30 days this invoice is outstanding". Tax will be payable on the $200 invoiced even if the customer paid the supplier 60 days late and eventually paid $208.
GST M 300-7 "Value of Supply" under "Early/Late-Payments"