question regarding Tax

[meetoo121]

Hey guys i'm just wondering can someone explain to me the whole tax thing on ebay?? please and thanks. 

like how do I charge tax and what do I do with the tax. I have never had an online business before and i dont know about this. 

Looking for help to explain about it. 

[pierrelebel]

Start here: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/menu-eng.html 

Expect to take at least two hours to get a quick overview as you follow the many links.

Now, if you do not expect to sell $30,000 this year, you can make life easier for yourself: forget the tax.

You pay GST/HST when you buy your products, the tax becomes part of your cost of goods,  and that is the end of that.

You cannot charge tax to your buyers (and remit to the government) unless you are registered to do so.  Under $30,000 annual revenues, it is not needed federally. Some provinces may have different requirements.

When calculating your net profit for income tax purposes, you add up your sales, deduct your cost of goods and your related expenses and declare the net profit as business income on your tax return.

If you expect to sell more than $30,000 this year, after you have spend some time of the government website, consult a competent accountant, preferably experienced in mail order and your personal circumstances.

Good Luck

[cumos55]

That $30,000 includes...

(1) All sales worldwide, including Canada, US and elsewhere

(2) the total of final price, plus shipping and handling, paid by the buyer..... 

Your first deduction is postage paid by you,  the seller.

[hockey_cards_by_dh]

How does consignment play into this tax business. Let's say I sell 30k but all in consignment? The merchandise is not actually mine, I just take a 30% cut and pay all the eBay and Paypal fees as part of my commission? My eBay sales will show up as 30k but technically my income from 30k worth of consignment sales is only $9000.00

[pierrelebel]

I suggest you consult a competent accountant familiar with HST/GST regulations.

The $30,000 treshhold is based on revenue not net income or profit.  From my understanding, anyone with gross revenue (including shipping charges) of $30,00 or more is required to register with GST/HST and remit the appropriate amount of tax for taxable transactions based on the province of the buyer.

Income tax of course is different and one needs to report gross sales and net profit on the tax return.  Only the net profit is used to calculate total income and eventually taxable income.