Dutchman - "... If I then go to the Post Office to ship my parcel, they will again charge me HST because it is going to Ontario?"
Maybe, maybe not. It depends on the type of service you use and how you pay for the service.
For example, a parcel from AB to ON shipped by "regular parcel" would cost you 5% GST only, regardless how you pay. The same applies to small parcels (under 2cm thick) shipped as "lettermail".
The same parcel, shipped "Xpresspost" would cost you 13% HST if you pay the clerk to process the parcel and affix the postage or only 5% GST if you purchase the postage stamps from the clerk for the same amount (except for the tax) and affix them yourself to the parcel. This is not a joke. It is the law!
If you ship the same parcel "Priority" the same tax calculation would apply.
The information above applies to individuals using Canada Post to ship parcels. The rules are slightly different for "commercial" accounts.
Of course none of that has anything to do with eBay or any other venue a seller uses to advertise his/her products.
"To me that is double dipping"
Yes it is. The same applies to the products you resell. You most likely paid tax at time of purchase and now you will pay tax on the fees applicable to their sale. The only way to avoid double taxation is to register with GST/HST and get it back as ITCs.
dinomitesales - "If you're a small-time hobby seller that has no plans to register for GST then oh well, suck it up. In the grand scheme of things it is a very small increase in your expenses."
100% correct.
On $100 sales, fees are $10 and the government charges GST/HST on the service from $0.50 to $1.50
That works out to one half of one percent to as much as one and half of one percent.
And life does go on.
The way I see it that tax (GST/HST) should have applied from the beginning as it has applied to other auctioneers selling goods for others. eBay had an unfair advantage over Canadian auctioneers making a living out of selling goods for others. Now we have a level playing field.
chipmunk - "I wonder if this applies to listings on Ebay.COM?"
Yes it does. Fees on eBay listings are taxable (GST/HST) to Canadian sellers regardless of the venue they use: eBay.ca, eBay.com, eBay.uk, etc...
"Does paying this tax get a seller's name on the CRA radar?"
There is no choice but paying the tax, just as one pays the tax at the post office, at the office supplies store, etc...
Canadians are required by law to self report business income (line 135 on your annual tax return), regardless how small or large it is. CRA has access to eBay's information, PayPal's information, bank's records, etc....
Many may think they can get away from paying income tax on their earnings if they "fly under the radar". And that may work for some... for a while, until reported by someone (often a former spouse or partner wishing to get even) or audited. Yes Canadian eBay sellers do get audited from time to time.
And the auditors look at 'tax cheaters" differently. They decide how much tax should have been paid and the taxpayer must either pay or go to court to prove CRA wrong.
Dutchman - As stated many times on these boards over the last fifteen years, taxation is generally for business (small and large).
Canadians selling their own "stuff" do not attract taxation. The exceptions will be for consumption tax (GST/HST) on goods or services purchased by individuals in the process of selling/shipping their goods.
A seller goes to Staples to buy envelopes and packing tape, GST/GST will be charged
A seller goes to the Post Office to mail the parcels, GST/HST will be charged (if and as appropriate, based on destination)
A seller uses an auctioneer service to sell the goods, GST/HST will be charged on the fees charged by the auctioneer. The tax that has always applied to auctioneer will now apply on fees charged to Canadians by eBay to list/sell their products.
"I paid no tax on any of my products,"
???
If you purchased your items from another collector, is it possible the tax was paid by such collector at time of purchase and simply passed on to you (included in the price)?
".... but for high volume sellers. "
That is correct and.... high volume sellers would most likely be GST/HST registered and the change does not really affect them. The tax now applied by the federal government (and collected by eBay) will be 100% refunded to those registered sellers through Input Tax Credits (ITCs)
"how can Ebay tax someone else's service "
eBay does NOT tax. The Canadian federal government does. eBay only collect the tax on its behalf. They are obligated to do so.
"...wrap my senior head..."
I get that! I am glad I had the opportunity to be involved in several aspects of Canadian taxation early in my careers.
Today (at 71) I would find it challenging to get started!
"... everyone wants to tax things."
Not really. Only the governments (all levels) want taxes. Some of us (small and large businesses) are forced by law to collect it and remit it.
"When are newspapers, Craiglist, Kijiji, personal websites, etc going to have to collect tax on sales and shipping for the service they provide? "
By law, the tax (GST/HST) is collected and remitted by the seller. The same is true on eBay.
Sellers (if registered) are required to remit the tax. It has nothing to do with eBay. eBay does not get directly involved in collecting GST/HST from buyers. Sellers do (if registered and required to do so).
When placing an advertisement in a newspaper or magazine, that newspaper or magazine does charge the advertiser the GST/HST. It is no different on eBay.
"... then taxes that FVF on shipping which really should not be taxable."
eBay, like Amazon (the leader in the field), charges fees on the value of the transaction.
As we both know, for years many eBay sellers would underprice their items and overprice the shipping charge to avoid paying fees to eBay. We have all seen examples of clocks selling for $1 and $80 shipping charge - where eBay would only collect its fees on $1. It seemed unfair.
To solve that type of abuse, Amazon and eBay changed their policy to charge their fees on the total value of the transaction (just like PayPal has been doing all along).
It does not really matter if the transaction or part of it is taxable or not from eBay's perspective. Their fees are charged on the total value of the transaction.
By the way, the situation is not unique to Canada. GST (or VAT) has been charged for years on eBay fees in Australia, Europe, etc....
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