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

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:

 

 

 

 

 

ProvinceRate
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.

 

 

 

 

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

It sounds, then, like there is a tax which eBay.ca (not eBay.com) has been paying for some time for profits (FVFs in this case) but is just now deciding to pass on to us.

 

It could have taken the form of a fee increase, but they've opted to pass it along as HST on FVFs instead.

 

Is that what's happening?

 

In other words, the Canadian Government hasn't just imposed a new tax on all venues (not just eBay) for FVFs and the like.

Is that right?

 

 

 

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


@sylviebee wrote:

It sounds, then, like there is a tax which eBay.ca (not eBay.com) has been paying for some time for profits (FVFs in this case) but is just now deciding to pass on to us.

 

It could have taken the form of a fee increase, but they've opted to pass it along as HST on FVFs instead.

 

Is that what's happening?

 

In other words, the Canadian Government hasn't just imposed a new tax on all venues (not just eBay) for FVFs and the like.

Is that right?

  


Billing services were previously considered, for tax purposes, to take place outside of Canada since the core infrastructure (lets call it the magic auction..sorry buy it now machine) was not located in Canada. Something likely has changed with a CRA ruling on this, or will be changing in the future. No GST was collected, absorbed, or remitted in the past. They now have to collect and remit the GST. They are not financially benefitting from this change and you could reasonably make an argument this penalizes them as some sellers may no longer wish to continue selling here and they now have an added administrative burden.

 

What is currently happening in ecommerce is that all jurisdictions are reassessing how to maintain current levels of tax revenue as more business shifts from retail to ecommerce and from national to international. This is especially relevant in Canada given how much online shopping is done with out of country retailers and how little the de minimis is enforced on postal imports. Large retailers who have a national tax collection onus have long been crying foul over having to compete with individuals and small businesses that either do not collect taxes or do so in a more limited fashion and having to compete against foreign retailers while they have to pay the Canada tax (regional pricing models) on inventory they buy. Ebay and others are pushing for an increase to the de minimis, which would lead to a (potential) shortfall in taxes collected.

 

 

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

That makes sense.

 

Thanks for the details.

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

   I wish they announced these changes before my yearly subscription was renewed on May 1. Now I'm stuck paying subscription fees for another year. They just raised the price of the basic subscription fee by $4 not long ago, now we have to pay tax on that too. Isn't it the buyer that pays the tax, why pay tax on fees charged by a company, I suppose it's goods and "services". Does ebay pay tax, or do they get a tax break like all other big companies? I don't feel right paying tax to a company based in the USA. I'm sure they made up this ebay Canada Limited just so they could charge tax. Soon the sellers will have to pay tax on the whole amount including purchase price, it's all downhill from here. We have the fvf on purchase price and shipping, listing fees, subscription fees, paypal fees, and now tax on ebay fees. It also costs way too much for upgrade features on listings such as bold lettering, highlighted listing, international site visibility, subtitles, and reserve price. It also takes a lot of time to picture and list an item accurately, packaging and shipping the item, and hand making items in my case. Not to mention having to be fully responsible for any return costs if a buyer wants to return an item, which has to be worked out between the buyer and seller without any help from ebay, and is confusing to do with an international buyer, even though it states in the listings the buyer is responsible for return costs. I am also tired of buyers getting impatient when an item arrives 1-2 days late, and want a refund, which happens more often these days than ever before. In the USA, pictures on ebay are now in their system for everybody to use as they wish, as well as their listings will automatically be renewed unless cancelled, as well as ebay being able to change sellers listings and pictures without the sellers consent as they wish. Last but not least, there are more glitches on ebay and paypal than I can even count, ones that haven't been fixed in years, so the services ebay provides are not even that great to begin with. What's wrong with these people?

Message 64 of 210
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Canadian sellers to be charged GST/HST/QST on all fees effective July 1 2017?

" Isn't it the buyer that pays the tax,"

 

Yes.

 

And, in this case, you are the buyer of the service provided by eBay.

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

Does ebay pay taxes? If so, to whom? I heard they get tax breaks. I can't see any reason why a company in the USA would have to pay taxes to Canada. So why would we need to pay Canadian tax to an American company on their services and fees, for them to remit the tax back to our government? Are we paying ebay taxes now if they pay any at all? I wish I could pass my taxes onto somebody else to pay. It's kind of like how Trump wants to build this wall between Mexico and USA, and wants Mexico to pay for it. It's also strange that ebay & Pitney Bowes collect import fees for our government through the global shipping program. Shouldn't our government be charging us tax directly, not indirectly through American companies? Does ebay work for our government or something.

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


@melissasminis wrote:

Does ebay pay taxes? If so, to whom? I heard they get tax breaks. I can't see any reason why a company in the USA would have to pay taxes to Canada. So why would we need to pay Canadian tax to an American company on their services and fees, for them to remit the tax back to our government? Are we paying ebay taxes now if they pay any at all? I wish I could pass my taxes onto somebody else to pay. It's kind of like how Trump wants to build this wall between Mexico and USA, and wants Mexico to pay for it. It's also strange that ebay & Pitney Bowes collect import fees for our government through the global shipping program. Shouldn't our government be charging us tax directly, not indirectly through American companies? Does ebay work for our government or something.


Like any large multinational company their tax structure is going to be complex and involve multiple jurisdictions. However this change effectively closes a loopholes through the creation of a Canadian entity, which is very likely not something ebay wanted to do. It is the responsibility of the party providing the good or service to collect and remit GST/HST. When Canada Post charges you GST for shipping services it is Canada Post that collects and remits the tax, likewise ebay collects and remits for the service they provide. Not sure why people are getting so confused about this.

 

 

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


@pierrelebel wrote:

 

 

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


Yes, until today of course it was a moot point (for my particular situation at least), and frankly I didn't like the idea of registering for GST and having to start charging tax to my Canadian buyers, even if I did get a few dollars back every year (I've never been obliged to register, as I've always been under the $30K annual requirement).  However, the effect of this new announcement won't be negligible for me over the course of an entire year.  

 

My main concern is adding more "busy work" to my already overburdened schedule.  As it is I already separate out the GST/HST on everything I purchase, so at that end at least there's no new work involved.  Perhaps the effort of having to account for and remit the GST/HST for the few Canadian sales I get in a month would be worth it in the long run.  

 

Like you, I'm curious about the "why now?" aspect of this change.  I can only assume pressure was being brought to bear on eBay, either from CRA or from the non-online retail world through our government, for eBay to finally collect and remit taxes from its sellers/subscribers.  The truth is, all this tax-free happiness has probably been a loophole that conferred an advantage on the likes of eBay and its Canadian sellers (and buyers) for many years, while depriving the Canadian government of revenue it would otherwise have been receiving had those businesses been brick-and-mortar stores. 

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

I can only assume pressure was being brought to bear on eBay, either from CRA or from the non-online retail world through our government

 

I'm pretty sure that is a bad assumption. eBay has decided for whatever internal reasons that they wanted to set up a Canadian division (unlike the "shell" that was eBay Canada). They will now be a Canadian corporation (owned by a foreign company) and just like GM, Ford, GE, Costco, Wal-Mart etc. will report their Canadian business to the government of Canada and pay corporate income tax in Canada.

 

 

If anything this realignment of their corporate structure may have been brought about by pressures within the EU. eBay unlike a number of the bigger tech companies (Apple for example) have actually been pretty responsible when it comes to paying income taxes. They have in the past repatriated much of their foreign profits back to the US and paid taxes on those profits.. Apple has been one of the worst offenders holding 125+ BILLION in profits in offshore accounts (Ireland mostly) and avoiding billions of dollars in taxes due to the US government.

 



"What else could I do? I had no trade so I became a peddler" - Lazarus Greenberg 1915
- answering Trolls is voluntary, my policy is not to participate.
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Canadian sellers to be charged GST/HST/QST on all fees effective July 1 2017?


@rose-dee wrote:

My main concern is adding more "busy work" to my already overburdened schedule.  As it is I already separate out the GST/HST on everything I purchase, so at that end at least there's no new work involved.  Perhaps the effort of having to account for and remit the GST/HST for the few Canadian sales I get in a month would be worth it in the long run.  

 


If this is the case you have already answered the question for yourself as you are already doing the bulk of the work in keeping track of the GST. After a quick tally of totals (take your paypal sales history, filter your sales, and then split out the total for Canada) it is then literally 4 fields of data to input for most people. From what you describe there are very few Canadian sales so the benefits of being able to claim back GST/HST amounts should outweigh the potential sales lost. If you are already keeping track of GST/HST amounts the hard bit is done.

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

One more nail in the Ebay coffin!

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

In the area I specialize in the growing trend has been to list on other sites as well as eBay.  Quite a few sellers now list the same items on all 3 sites catering to vintage/antique items.

 

It's taken years for the other 2 sites to get foot holds, but now they are firmly established and are competing with eBay.

 

While listing fees are much higher on those sites, there are no or low FVFs, and they don't add HST to the fees paid by Canadians.

It's very unusual for sellers of collectibles to be GST registered, so there will be no relief in that regard.

 

This will matter to Canadians selling vintage items.  Most already avoid listing higher end items here, and when we cross list we hope items sell elsewhere before they sell here.

 

I'll continue to use all 3 sites, but for many Canadians this will be final push to walk away from eBay altogether.

 

This is a notable increase in eBay fees.

 

 

 

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


@recped wrote:

 

I'm pretty sure that is a bad assumption. eBay has decided for whatever internal reasons that they wanted to set up a Canadian division (unlike the "shell" that was eBay Canada). They will now be a Canadian corporation (owned by a foreign company) and just like GM, Ford, GE, Costco, Wal-Mart etc. will report their Canadian business to the government of Canada and pay corporate income tax in Canada.

 

If anything this realignment of their corporate structure may have been brought about by pressures within the EU. eBay unlike a number of the bigger tech companies (Apple for example) have actually been pretty responsible when it comes to paying income taxes. They have in the past repatriated much of their foreign profits back to the US and paid taxes on those profits.. Apple has been one of the worst offenders holding 125+ BILLION in profits in offshore accounts (Ireland mostly) and avoiding billions of dollars in taxes due to the US government.

 


In the end, which of us really knows the true reason behind this move?  

 

If eBay fought years ago with CRA to maintain its legal status as an non-domestic entity on the basis of the location of its infrastructure (servers, etc.), it's odd that it would decide to give up that status now. Perhaps the financial benefits of incorporating in Canada outweighed the blow eBay must have known this would be to its smaller Canadian sellers.  

 

It does seem on the face of it that it would have made a lot more sense for eBay to have incorporated a subsidiary in Canada years ago when they dominated the online market.  I'm not even certain that incorporation in Canada per se would oblige eBay to collect GST/HST on Canadian fees, if there was no change in the original basis of the exemption (such as moving their infrastructure).  Many companies have satellites incorporated in Canada but actually do business out of other locations.  It is a possibility that lobbying by the non-retail industry could at least partly account for this about-face on eBay's part.   

 

In any event, it's useless to speculate, but at least I expect the Canadian government won't be unhappy about collecting all that extra GST/HST from eBay sellers.  

 

I also don't know that I could agree that eBay has been a particularly responsible corporate citizen with respect to repatriating its offshore money and paying its proper share of corporate taxes.  Last I looked (which I admit was 2014), eBay's S.E.C. submission stated they had over $3.4 billion stashed overseas.  

 

 

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

"If eBay fought years ago with CRA to maintain..., it's odd that it would decide to give up that status now."

 

You may remember that about ten years ago eBay was fighting CRA in Canadian courts - for several years - when eBay refused to provide sellers information and sales records, "protecting the privacy for sellers".  CRA eventually won in Court and eBay and CRA have been cooperating ever since.

 

It is quite possible, in fact probable, that on the consumption tax issue eBay decided to play along instead of fighting.  eBay knows that their fees are already (VAT) taxable in other jurisdictions such as Europe, UK, Australia, etc...

 

Looking at the big picture, there is no cost to eBay.  Whatever tax they collect they remit.

 

Most transactions by Canadian sellers on eBay are by GST/HST registered sellers who will not be materially affected. Whatever tax they pay, they get all of it back through ITCs.

 

The losers will be small (not GST/HST registered) sellers who will have now to pay a tax on their eBay fees, costing them. on average, 1% to 2% of their sales, largely depending where they reside.

 

If that small percentage results in some sellers leaving eBay to find other venues where to sell their products.... oh well... this will not be the first time eBay loses sellers due to an increase in fees or change of policy.

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


@hlmacdon wrote:

From what you describe there are very few Canadian sales so the benefits of being able to claim back GST/HST amounts should outweigh the potential sales lost. If you are already keeping track of GST/HST amounts the hard bit is done.


Yes, in light of this change by eBay, it's probably worth the trouble of registering and dealing with charging GST on sales.  

 

By the way, do you happen to know if there are any complications in setting up listings on eBay so that only Canadian buyers pay GST/HST?  I presume the seller him/herself has to remit the collected tax to the government, but how often?  One site I sell on actually does the collecting and remitting of VAT themselves, relieving the sellers of this tiresome task, but I don't expect eBay is that accommodating with respect to GST.  Or is it?   

 

If you've been charging GST/HST to Canadians as a Canadian seller, have you encountered any buyer complaints or negative FB about having to pay tax?  Since a lot of Canadians must be used to being able to avoid paying GST by buying online, being obliged to pay it might not make them very happy.  For some people, that extra potentially 15% is significant.  

 

 

Does eBay itself provide any automated input during the checkout flow (i.e. by applying the correct %, whether GST or HST, depending upon the buyer's location), or is this something the seller has to do?  For example, if a Canadian buyer uses the cart and pays in the usual way without any invoice from the seller, does eBay's system calculate the appropriate tax?

 

I'd actually be very interested in hearing from any sellers who have been charging GST/HST for some years on whether it has created any particular buyer issues, and how easy or difficult the set-up and remittance process is.  

 

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

"I also don't know that I could agree that eBay has been a particularly responsible corporate citizen with respect to repatriating its offshore money and paying its proper share of corporate taxes.  Last I looked (which I admit was 2014), eBay's S.E.C. submission stated they had over $3.4 billion stashed overseas.  '

 

A quick look at eBay Income Statements for the last few years shows eBay pays relatively very little corporate tax on its profit.

 

http://www.marketwatch.com/investing/stock/ebay/financials

 

2016: profit $3,080,000,000, income tax paid (combining domestic and foreign) $ 475,000,000 (about 15.5%)

 

Message 76 of 210
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Canadian sellers to be charged GST/HST/QST on all fees effective July 1 2017?

"...or is this something the seller has to do?"

 

The seller is responsible to set up the appropriate tax table.

 

eBay cannot do it as eBay does not know how many places of business a specific seller may have in Canada resulting in different tax rates. 

 

Also, eBay does not have the information about the taxable nature of the product offered.  Many items offered on eBay are either tax exempt (some gold coins) or taxed at the 0% rate (basic groceries for example)

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

There was once a time when there was no entity identified as eBay Canada. 

 

All Canadian sellers listed on eBay.com...My first registration was on eBay.com.

 

The came eBay Canada... and Canadians were allowed to list on eBay Canada using US or Canadian dollars.  An historical activity.

 

Eventually I moved my registration to eBay Canada as did other Canadian sellers.

 

Then came our last big link to the US... no more listings in US dollars on eBay Canada.

 

The new eBay Canada Limited could be the result of worldwide adjustments in taxation, whether European Union,  the US or anywhere else.  Countries  that used to be insignificant in the world economy are growing quickly... and exerting their influence.

 

Taxation is quickly changing in the US, within and between the states of the US.  

 

By separating Canada form eBay US....  we are now independent of any action, specifically taxation, on the part of any state in the US or the US itself.

 

Canadian sellers now have their own representative as a world corporation... linked to the US, eBay .com but separate from the US  and everything that can occur within the US and many things that could perhaps influence Canadian sellers,  more than any of us would want....  now or in the future.

 

The future of eBay Canada will be to serve Canada, and Canadians first,  and then reach into the US...

 

For some this will be a minor or major adjustment, while for others the adjustment  has already occurred.

 

--------------------------------------

It was years ago that my focus for selling on eBay was Canada an everything Canadian...  with an extension in specific areas of inventory appropriate to the needs of Canadians as well as those who lived in other countries....  This required an intensive focus at times,  but it seemed to work... Sometimes it took time to occur,  but then it did.  This was a stimulus to continue in a specific direction,  and I am here, and will continue to be here.

 

 

Message 78 of 210
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Canadian sellers to be charged GST/HST/QST on all fees effective July 1 2017?

eBay does have a sales tax table that can be used by sellers.

 

http://my.ebay.ca/ws/eBayISAPI.dll?SellerSalesTaxTable

 

I cannot use the table  because  the tax is presented as a single number for each province..

 

For me I sell books and have to apply HST at a different level for books  than for postage...

 

The tax on  lettermail is the same for provinces....  GST = 5 %

 

The end result is that I include the tax in all items sold  and in postage.

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


@pierrelebel wrote:

 

 

Looking at the big picture, there is no cost to eBay.  Whatever tax they collect they remit.

 

The losers will be small (not GST/HST registered) sellers who will have now to pay a tax on their eBay fees, costing them. on average, 1% to 2% of their sales, largely depending where they reside.

 

If that small percentage results in some sellers leaving eBay to find other venues where to sell their products.... oh well... this will not be the first time eBay loses sellers due to an increase in fees or change of policy.


There is clearly no monetary cost to eBay, but there may be other costs (which I imagine must have been the reason eBay fought with CRA in the first place over this issue).  If eBay loses even more Canadian sellers over this, and Canadian buyers as well, does that matter to them?  

 

I'm one of those potential "losers", living in NS where HST is 15% (that is, if I don't become a GST registrant, which I'll likely feel obliged to do).  I think many smaller sellers do not want the added complications of dealing with GST registration, collection and remittance, particularly if they sell mainly to Canadians. 

 

I think it's rather harsh to simply say "oh well".  True, it will likely make little difference to eBay.  However, there are a lot of folks in Canada, especially many retirees or semi-retirees, who have managed to supplement their incomes by selling on eBay as somewhat "informal" businesses, who don't have a lot of accounting or legal skills and for whom this change will be a big blow.  Many of these people are some of eBay's most reliable, longstanding and experienced sellers, albeit not their biggest. 

 

It isn't just the payment of GST/HST on fees that is the sole problem.  This comes on top of many other changes by eBay that, far from supporting and growing their traditional "core" seller base, has pushed those people further and further into a corner where making a reasonable profit is untenable.  

 

I'm thinking for example of the ca. 25% hike in store fees, the 50% reduction in TRS discounts, and the removal of $US listings on .ca, which forced a lot of sellers onto .com where FVF savings strategies were less possible.  All of this adds up to far more than 1% to 2% of sales, particularly in a situation where sales have been slumping generally.  

 

However inevitable this was, I feel for those smaller Canadian sellers who are struggling and for whom this may be the final straw.   

 

 

 

 

 

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