eBay

cdnmartialartist · ‎02-11-2014

Not sure where to post this question. I've been selling an item for someone else for about 1 month now. How it works is:

- buyer pays me

- I send 60% of the sale via western union to the supplier

- I pay for ebay fees, paypal fees and western union fees

- I take home about 20% total profit

How does this work for paying taxes? I just received an email from paypal saying I need to provide my tax ID number (whatever that is). I certainly don't want to be taxed on the entire sale amount when I only see 20% of it!

I'm in Canada and sell on ebay.com. I have a verified paypal account with verified canadian address and bank account.

Any help would be great.

Thanks.

Dan

pjcdn2005 · ‎02-11-2014

Paypal doesn't usually ask Canadians for that info so that email may not be from them. Is the email addressed to you by your real name? If not..it's not from Paypal. If it does, I would phone Paypal and find out what is going on.

About this arrangement that you have with this person that you are selling for...it sounds a little shady and risky for you.

Do they have the product and then ship it out or do you do that?

cdnmartialartist · ‎02-11-2014

They are an authorized reseller for the product. They order directly through the manufacturer so the items are sent straight from the manufacturer to the buyer. So far, I've gotten 100% positive feedback from everyone who's purchased them. 🙂

I signed into paypal just now (as normal) and received the same message asking for my tax information.

pierrelebel · ‎02-11-2014

"How does this work for paying taxes?"

Unless your annual worldwide trading revenues exceed $30,000 you do not have to worry about GST/HST

As far as income tax is concerned, you need to report your net profit on line 135 on your annual tax return (NO minimum). That amount will be added to your other income (employment, investment, pension, etc...) to arrive at your total income and, eventually, taxable income.

The gross sales are entered on line 162 but are not included in the tax calculation. The number is there for information purposes only.

Net profit is just that: your sales minus your cost of goods minus your related expenses. If the amount is in US$, it should be converted into Canadian dollars for tax reporting purposes.

cdnmartialartist · ‎02-11-2014

Thanks for the reply. It's great to know where to enter the dollar figure for net profit. But, what do I do about Paypal needing a Tax ID Number from me?

rose-dee · ‎02-11-2014

@cdnmartialartist wrote:
Thanks for the reply. It's great to know where to enter the dollar figure for net profit. But, what do I do about Paypal needing a Tax ID Number from me?

It sounds as if Paypal is assuming you're an American (or assuming you're a full-time seller with gross sales of over $30K) and therefore need to provide a tax number.

If there's a contact phone # or email relating to the message you received (or even if there isn't), I'd contact Paypal, preferably by phone so you can speak to a live human being, and try to clarify the situation. They may not be fully aware of Canadian tax requirements. You can point them to the relevant page(s) on the CRA website.

At least Paypal is usually a lot better to deal with than eBay customer service.

pierrelebel · ‎02-11-2014

Tell PayPal you are Canadian, live in Canada, and do not have a tax number ID.

femmefan1946 · ‎02-11-2014

Surely an individual's "tax number'" would be his Social Insurance Number?

Not sure what it is for a corporation, although we have both PST and GST numbers for remitting sales taxes. I leave that up to Mike the accountant.

cumos55 · ‎02-12-2014

If one registers a business, one gets a "business number"...

When one registers for GST/HST... This business number is the same or a part of the number used by the Canadian Revenue Agency. (CRA)

Registration as a business is not mandatory in Manitoba, but may be so in other provinces.

One can be registered as a business without having to be registered with CRA.

Talking directly with Paypal is required to find out what is going on.

I do know that some businesses... booksellers in Winnipeg... are registered as a business in Canada, and have a "registered" business presence in Pembina North Dakota..

These book sellers deliver their parcels to USPS in Pembina, ND..

cumos55 · ‎02-12-2014

The complicating factor might be the selling on eBay.com

Or

Another factor could be this seller sells for someone who lives, in the US...

Or..

There could be something else.....

Also... Unless this seller sells high priced items on eBay.... 20 % is low as a take home value, as a selling commission

skylarstuff · ‎02-12-2014

"Unless your annual worldwide trading revenues exceed $30,000 you do not have to worry about GST/HST"

Pierre, I always thought that you only need to collect GST/HST if your sales in Canada are over $30,000.

Example if one sells $1,000 to Canada and $30,000 to the rest of the world for a total of $31,000 does the individual still need to worry about GST/Hst?

cumos55 · ‎02-12-2014

With respect to GST/HST.

(1) The $30,000 includes all sales worldwide.... not just Canada.

(2) The $30,000 includes the cost of shipping ....

The total amount that a buyer pays a seller is considered income, because it is the seller that allocates money to shipping.

For many sellers the amount a buyer pays for shipping is less than the actual cost for shipping... free shipping as an example

(3) Sometimes a seller may choose to register for GST/HST, even if the total sales plus shipping worldwide is less than $30,000.

In a situation where 90 % of sales are to non-Canadian..... a seller purchases items for sale in Canada and pays GST or HST.

Seller registers to collect GST/HST..... However the main reason to do so is to get a refund of tax paid on inventory... specifically the amount collected from buyers is less than that paid for inventory, postage and supplies......

cumos55 · ‎02-12-2014

Skylarstuff

Your location as

I Prefer Pay Pal, Canada

Has a negative impact on your placement in a search on both eBay.ca and eBay.com.

It does not go over well with eBay... and to some degree also not with buyers. Shipping cost relates to where both the seller and the buyer live.

Many sellers are afraid to let people know where they live. However, it must be noted that if you do it right... a seller's privacy can be maintained with out any loss of privacy....

pierrelebel · ‎02-12-2014

"I always thought that you only need to collect GST/HST if your sales in Canada are over $30,000."

If your worldwide annual revenues (sales plus shipping/handling charges) exceed $30,000 you must register with GST/HST.

If your ratio is $1/$30, you only need to worry about remitting GST/HST on the Canadian taxable sales while you get Input Tax Credits (ITC) on 100% of your purchases and business related expenses.

If GST/HST registered, it is your choice to absorb the tax or charge it to your buyers.