Canadian sellers to be charged GST/HST/QST on all fees effective July 1 2017?

[snoopwiz]

As part of the Summer 2017 update, eBay has announced the following.   You will see all updates in the email they are sending.

Today, eBay announced changes that will impact Canadian residents and businesses who use eBay.

To better reflect how we manage and operate our platform in Canada, on July 1st, 2017 we will be changing the contracting party for Canadian residents and businesses from eBay International AG to eBay Canada Limited, a Canadian corporation.

As a result, eBay users residing in Canada will begin contracting with eBay Canada Limited. This change will impact these users' User Agreement, User Privacy Notice, Billing Agreement, and other agreements with eBay.

The new contracting entity, eBay Canada Limited, is subject to Canadian tax law. As a result, sales tax (GST/HST/QST) will be charged on eBay fees starting July 1st, 2017. The applicable sales tax rate will vary by province, which we will determined based on your registered eBay address. You should confirm that your registered address is correct. The current applicable tax rates are:

Province	Rate
Alberta (AB):	5.00%
British Columbia (BC):	5.00%
Manitoba (MB):	5.00%
New Brunswick (NB):	15.00%
Newfoundland and Labrador (NL):	15.00%
Northwest Territories (NT):	5.00%
Nova Scotia (NS):	15.00%
Nunavut (NU):	5.00%
Ontario (ON):	13.00%
Prince Edward Island (PE):	15.00%
Quebec (QC):	14.75%
Saskatchewan (SK):	5.00%
Yukon (YT):	5.00%

While the addition of GST/HST/QST on fees is new, eBay's prices will not change as a results of this legal entity change. Furthermore, you should see no interruption in your service as a result of this change, and you will not need to make any updates to your listings.

If you are a business user, we recommend that you consult with your tax advisor to understand your eligibility and the process for claiming an input tax credit on tax paid for services provided to your business.

[cumos55]

We now have an eBay Canada Limited..... Things will change.  in relation to this new tax charge

Step back  and do not bang your head against the nearest wall.

eBay will have to measure up to CRA's rules  like anyone else registered to collect GST/HST.  Nobody can play games with the GST/HST because all it takes is one audit  and CRA will hang eBay out on the nearest clothes line...

[cumos55]

This tax on fees will not be a problem for those already registered to collect GST/HST.

For those not registered to collect GST/HST... there may be another way to have the buyer pay the tax paid on eBay fees.

Many sellers do charge a handling fee.

For sellers in GST provinces, increasing the handling fee will pay this tax on eBay fess.... quite easily...

The question then becomes.... Can a seller in a HST/QCT province increase the handling fee, and in so doing have a buyer pay the tax  that eBay will charge on fees...

[cumos55]

eBay fees are 20 % of a total of item price plus shipping for my situation.... with one-third of sales to the US, with shipping only to the US and within Canada.

With $1000 in sales plus postage,  eBay fees will be $200

For a seller in a GST province,  the tax on eBay fees  will be 5 % of $200 = $10.....

For sellers in a GST province, the tax will be 13 % of $200 or $26  for Ontario  or 15 %  of $200  or $30. for the other HST provinces and also Quebec

If one sells 30 items to achieve a total of $1000 for sales plus postage... then a handling fee of $1.00 per sale will have the buyer paying the  tax on $200 of eBay fees. for sellers in HST provinces.

The handling fee can be adjusted in relation to the number of sales required to achieve that $1000 total, for sales plus postage.

The end result is .... An adjustment in the handling fee will have a buyer pay the tax charged on eBay fees

Sellers with less than $30,000  sales plus postage  could use this option to have the buyer pay the tax levied on eBay fees....

Easily done in GST provinces,  but requiring a lot more of an adjustment in the handling fee  by sellers in HST Provinces.

[cumos55]

It is the sellers in HST provinces and Quebec   that might find that registering to collect GST/HST  would allow a greater level of flexibility in having the buyer pay the tax on eBay fees....

This is where the tax becomes an ITC.... and the buyer pays taxes,  or the seller may get a refund of ITC  if the  total tax paid by the buyers is less than the ITC......  

ITC includes all taxes paid on ... inventory purchased to sell,  computer supplies... packing supplies... anything required to do the job of selling on eBay.

[lukey9]

There will be allot of Small Sellers that are going to be hit hard by the changes if they are not Registered for HST/GST especially here in the Nova Scotia  with the 15 % taxes . There are lots of people that just sell for a few extra cents that they bring in and will never register because they think there is more of a chance of an audit from CRA if they do. Since I closed my Store on May 1 and I was registered  the changes would not have hurt me at all.

[pierrelebel]

"going to be hit hard by the changes if they are not Registered for HST/GST especially here in the Nova Scotia  with the 15 % taxes . "

Yes.

If they sell items for $1,000 and pay $100 in fees, there would be an additional $15.00 to pay in taxes.

$15.00 / $1,000 = 1.5% of sales.

If they sell items for $100 and pay $10 in fees, there would be an additional $1.50 to pay in taxes.

$1.50 / $100 = 1.5% of sales.

Paying taxes is something we Canadians are used to.  eBay was one of those rare exceptions where the fees were not taxed, due to a technicality.  Sellers wishing to sell their "stuff" through local auctioneers had to pay tax on those auctioneers fees. It seemed unfair to them.  Now they have a "level playing field" where all venues (including eBay) have to charge tax to their sellers.

And life does go on.

[cumos55]

When an item is sold at a local auction,  it is the buyer that pays the tax..... GST/HST

Only under special circumstances does a consignor pay a tax for the auctioneer's service.

link to ...

http://www.cra-arc.gc.ca/E/pub/gi/gi-010/gi-010-e.html

for lots more information.

Although things can get complicated, I have never paid tax when a local auctioneer sold something for me.

It must be noted that when something is sold at auction on eBay....  the seller will pay a tax on eBay fees, and a Canadian buyer will pay GST/HST

[fornax1049]

"An adjustment in the handling fee will have a buyer pay the tax charged on eBay fees"

...and will result is less sales!

[cumos55]

There are many things that a Canadian seller can consider...

and each seller will choose what to do.

The biggest question is......

How significant is this tax on eBay fees to each Canadian  seller's bottom-line?

Each Canadian seller has to work their own numbers.......

There is no one answer for everyone

[cumos55]

If you sell something at $10, then eBay 's fee will be $1.00

and the tax  ....HST....on this amount is 15 % of $1.00 and that is 15 cents.....

The question then becomes....  How critical is this 15 cents  on this one one  sale....

Do the numbers... Do the  math.... and then consider what the options are....

and then add in listing fees.... store fees , if the seller has a store... and that is when the pennies multiply 

[lady.stark]

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@thestuffofchris wrote:

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@lady.stark wrote:

They could AT LEAST give us back the eBay bucks program!

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They are. It was announced in the Summer Seller Update alongside everything else.

http://pages.ebay.ca/seller-centre/news/seller-updates/2017summer/features-investments.html

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Yes and no. From this page: "selected Canadian eBay buyers will be invited to participate in the eBay Bucks program"

Does it mean not everyone will be able to participate?

Back on topic... I did consider registering to CBSA. But the items I sell are stuff I bought 5, 10, 15 years ago. I never kept any invoice for those items, because they were not for resale. How do I prove the price I paid back then? And the taxes I paid? I mean, for example, my Bruce Springsteen CD box sets.... I bought them when they came out and paid top $ for them. I'm realistic, I won't be selling them the price I paid. So it would be advantageous for me to register to CBSA. But how do I prove I paid said top $? If someone knows how, please tell me, and I will register immediately.

[rose-dee]

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@Anonymous wrote:

Hi folks.

That's correct - the impact of this change is that the fees assessed to you by eBay will be assessed by eBay Canada Ltd instead of eBay International AG (Switzerland), which means the seller fees themselves will become subject to Canadian sales taxes.

• This change will have no impact on the sales tax you collect from buyers as part of your ebay transactions. It only impacts the fees that eBay charges you, the seller.
  
  
• This has nothing to do with your choice of listing site. It has to do with your registration address. If you list on any eBay site, and you registered using a Canadian address, the any sellers fees you incur on eBay will be subject to ordinary sales tax, based on your Province of residence. So if you list on the Italian eBay site, and sell something to an Australian who buys the item on the German site, your seller fees for the listing and the sale will still be assessed by eBay Canada Ltd and will still be subject to Canadian tax, y virtue of your registration address.

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Hello Rodney, 

Would you please explain eBay's actual reason for this GST/HST change?  

Like Pierre, I'm completely puzzled as to why eBay is suddenly either choosing or being obliged to remit GST/HST to the Canadian government when I recall there was such contention with CRA over this to begin with.  Originally eBay was more than happy to claim that because its servers were located outside Canada, we Canadian sellers should not be paying GST/HST.  

Have the servers or other physical parts of the eBay operation changed location?  Has CRA made a new ruling specifically impacting eBay?

As an aside, between my impending loss of Global TRS due to today's announcement, and the fact that I currently reside in Nova Scotia, my real costs in fees have just jumped potentially 35% on every transaction -- an additional 15% on my eBay fees, and a loss of 20% TRS discount (which I've had for many years).  There aren't many small businesses that can absorb that kind of gouging. 

[dutchman48]

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@rose-dee wrote:

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@Anonymous wrote:

Hi folks.

That's correct - the impact of this change is that the fees assessed to you by eBay will be assessed by eBay Canada Ltd instead of eBay International AG (Switzerland), which means the seller fees themselves will become subject to Canadian sales taxes.

• This change will have no impact on the sales tax you collect from buyers as part of your ebay transactions. It only impacts the fees that eBay charges you, the seller.
  
  
• This has nothing to do with your choice of listing site. It has to do with your registration address. If you list on any eBay site, and you registered using a Canadian address, the any sellers fees you incur on eBay will be subject to ordinary sales tax, based on your Province of residence. So if you list on the Italian eBay site, and sell something to an Australian who buys the item on the German site, your seller fees for the listing and the sale will still be assessed by eBay Canada Ltd and will still be subject to Canadian tax, y virtue of your registration address.

---

Hello Rodney, 

Would you please explain eBay's actual reason for this GST/HST change?  

Like Pierre, I'm completely puzzled as to why eBay is suddenly either choosing or being obliged to remit GST/HST to the Canadian government when I recall there was such contention with CRA over this to begin with.  Originally eBay was more than happy to claim that because its servers were located outside Canada, we Canadian sellers should not be paying GST/HST.  

Have the servers or other physical parts of the eBay operation changed location?  Has CRA made a new ruling specifically impacting eBay?

As an aside, between my impending loss of Global TRS due to today's announcement, and the fact that I currently reside in Nova Scotia, my real costs in fees have just jumped potentially 35% on every transaction -- an additional 15% on my eBay fees, and a loss of 20% TRS discount (which I've had for many years).  There aren't many small businesses that can absorb that kind of gouging. 

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Don't forget the tax on the store price which in your case is an additional 15% as well

[hlmacdon]

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@lady.stark wrote:

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@thestuffofchris wrote:

Yes and no. From this page: "selected Canadian eBay buyers will be invited to participate in the eBay Bucks program"

Does it mean not everyone will be able to participate?

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Correct. It will be targeted as they only have limited marketing dollars to work with. Your fees go up to help cover the costs of programs like this and other initiatives. My assumption is they will be targeting frequent purchasers in only select categories, likely the ones where they have mass retailer support (to leverage retailer discounting to increase conversion).

[rose-dee]

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@cumos55 wrote:

Do the numbers... Do the  math.... and then consider what the options are....

and then add in listing fees.... store fees , if the seller has a store... and that is when the pennies multiply 

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Yes, the pennies do multiply, and multiply.  For a small "boutique" business such as mine, every penny counts, and what eBay has been doing over the past 3 or 4 years is chipping away at the edges of my already slim margins.  

The 15% HST I'll have to pay on fees (I'm in NS) will have a real and painful impact.  I frequently sell items in the US$200 to $400 range, and now that I've been forced off eBay.ca due to the removal of $US listings, I pay full FVFs on just about every sale since I can no longer benefit from offering free shipping on domestic (Canadian) sales in order to reduce FVFs.  Not only will my fees on such items increase by several dollars per transaction due to the 15% HST, but I'll be charged the additional 15% on every monthly store fee payment as well.  This will indeed add up.  Sellers in other provinces should be counting their blessings. 

I don't earn enough in a year to be obliged to be a GST registrant.  In my particular situation, earning under $30K per annum, being in Nova Scotia, and selling mainly (over 90%) to the U.S., GST registration might be worthwhile, but it might not in the end.  

Since I'm primarily a "manufacturer", the only GST I pay is for Canada Post expenses and the occasional purchase of stationery and printing supplies.  Any other raw materials are mostly purchased from the U.S. (no GST).  So it's not clear to me whether GST and ITC would balance out.  However, there is also the time and trouble factor, and all the additional complexities of more CRA paperwork and accounting that I don't really need to use up my precious time.  

This will certainly add more complication and cost for small sellers who are non-GST registrants, and as some have pointed out, it really isn't worthwhile for every seller to register.  Although eBay may have finally been forced into collecting GST/HST, it will doubtless have the ultimate effect of carving off quite a number of its "traditional" sellers, particular those people selling such things as vintage or one-of-a-kind items.  

By the way, when I mentioned 35% increase in fee costs in the previous post, I was thinking of the original 20% TRS discount I had had for many years (which helped me to cover some postal increases).  Of course that was recently reduced to 10% as well.  

[pierrelebel]

'I don't earn enough in a year to be obliged to be a GST registrant.  In my particular situation, earning under $30K per annum, being in Nova Scotia, and selling mainly (over 90%) to the U.S., GST registration might be worthwhile, but it might not in the end."

GST/HST is compulsory when worldwide revenue (sales and shipping/handling charges) reach Cdn$ 30,000

For many eBay sellers, it would be advantageous to register with GST/HST even if revenues are well below the Cdn$ 30,000 threshold, more so for sellers residing in HST provinces.

As a registered GST/HST seller, you get back ALL the GST/HST paid on ALL your business related purchases and expenses (including HST on eBay fees starting July),  One only needs to remit GST/HST on Canadian sales (rates varies by province).  Sales made to the USA and overseas do not require collection or remittance of tax.

Most sellers who actually sell 90% outside Canada end up getting a rebate cheque every year from CRA as the tax they remit on Canadian sales is less than the Input Tax Credits (ITC) or taxes they paid on their purchases and business related expenses.  I know from personal experience for over twenty-five years.

Worth thinking about. It would most likely put some money in your pocket!

[hlmacdon]

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@rose-dee wrote:

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I don't earn enough in a year to be obliged to be a GST registrant.  In my particular situation, earning under $30K per annum, being in Nova Scotia, and selling mainly (over 90%) to the U.S., GST registration might be worthwhile, but it might not in the end.  

Since I'm primarily a "manufacturer", the only GST I pay is for Canada Post expenses and the occasional purchase of stationery and printing supplies.  Any other raw materials are mostly purchased from the U.S. (no GST).  So it's not clear to me whether GST and ITC would balance out.  However, there is also the time and trouble factor, and all the additional complexities of more CRA paperwork and accounting that I don't really need to use up my precious time.  

This will certainly add more complication and cost for small sellers who are non-GST registrants, and as some have pointed out, it really isn't worthwhile for every seller to register.  Although eBay may have finally been forced into collecting GST/HST, it will doubtless have the ultimate effect of carving off quite a number of its "traditional" sellers, particular those people selling such things as vintage or one-of-a-kind items.  

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What you need to evaluate is what your mix of domestic versus international sales looks like. Is adding domestic tax, in a venue where many in your category are not, going to impact your sales? The required filing and paperwork is really not complex at all. The only new complexity with respect to GST/HST would be separating your zero rated sales (international) from your domestic sales. Other than that all you are reporting is your eligible ITC and the GST/GST you collected. Much of this information you will already be tracking for tax purposes anyways. For many sellers who primarily sell internationally, non-registration means missing out on a refund.

[cumos55]

eBay Canada Limited is a business registered in Canada....  and if sales are greater than $30,000   annual...

that is eBay fees collected from Canadian sellers.... guess what happens!!!

We used to pay our fees to a location  outside of Canada.

As Canadian sellers we now will have an eBay that is totally Canadian....  and we will eventually see what that will mean.

[sylviebee]

Just wondering:  Is this a new tax the Canadian Government has just decided to impose on Canadian eBay sellers, or is it a tax that eBay has been paying all along and has just decided to pass on to us?

Does anyone know?

[pierrelebel]

"Does anyone know?"

Yes.

That subject has been covered several times over the years by eBay's senior management.

There was and is no GST or HST included in the fees charged by eBay until now.  The change takes place in July 2017 when the tax charged by the Canadian and provincial (if applicable) governments will be included by eBay on the seller's monthly invoice and remitted to the federal government as required by law..