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.

[chipmunk_collectibles]

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@dutchman48 wrote:

Because we were billed through Switzerland before.

As of July 1st, we will be billed by Canada so now tax on the Ebay fees become owing according to our government.

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So I trust Ebay is now paying full taxes on all the profits it makes in Canada? Or do those still all get funneled to Switzerland to avoid Canadian corporate taxes?

I suppose what bugs some people about this change is it's just another example of the common small time hobbyist/entrepreneur/middle class having a tax loophole closed on them while the rich and the big transnational corporations (such as Ebay) continue to escape tax free through giant gaping loopholes that western governments don't have the courage or ethical fortitude to close.

[femmefan1946]

If I ship an item to the US or overseas, Canada post does not charge tax on that cost if over $5 (I think that is the threshold)

However, Ebay still takes their % of FVF's and then taxes that FVF on shipping which really should not be taxable.

Except that the shipping FVF is based on the first domestic rate the seller charges, not on the actual international rate.

So, if  you charge $1.80 to ship to Canada, eBay charges you and FVF of 18 cents on that. And collects another two shiny pennies for Ontario taxes. (Less than one penny in Alberta.)

If the same item were going to Afghanistan for $30, the FVF would be .... 18 cents. And the ON tax two cents.

Nor would you be paying Canada Post for the shipping label since as you note, there are no taxes on exports including postal services.

[femmefan1946]

very elegantly and efficiently for sellers -- the site collects the VAT directly from the buyer at the point of sale, and remits it to the respective countries.  The seller never has to get involved.  The VAT paid by the buyer is recorded in the transaction details for informational purposes.  

Rather like the GSP.

And we all know how popular and well understood that is.

[rose-dee]

@ pierrelebel -- Pierre, if you return to this thread, I have a question concerning your earlier comment that you used to pay the GST/HST on behalf of your Canadian buyers.  

I'm wondering how you reflected this in your transaction records.  Did you:

(a) Simply consider the listed price of the item to include GST/HST (which is what I'd plan to do), and break it out manually for your own records and purposes of remittance?  

(b) Or did you show the GST/HST as a separate charge (paid by you) that was in addition to the listed item price, but not paid by the buyer?  If so, would the buyer ever actually see the amount of the tax at their end? 

(c) Or -- a more awkward solution I would think -- did you set up GST/HST tax tables, allow eBay to add the tax to the purchase, then refund the tax to the buyer? 

Presumably in the case of (b) above, the buyer would never know they had saved anywhere from 5% to 15%, depending on their location, unless you let them know at the time of sale.  In the case of (a) above, where GST/HST is included in the price, the buyer would also effectively be getting a discount, but I'm not clear on how that could be reflected at the buyer's end, since eBay is in control of the transaction details (unless of course I invoiced in each case, which is not practicable for my situation since most of my buyers pay immediately).  

If I end up becoming a GST registrant and have to remit GST/HST for the small percentage of Canadian buyers I do get, I'd like to use the "I'll pay the GST" as a courtesy discount for them, i.e. a marketing point.  I'm interested in how you dealt with this.  

[rose-dee]

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@femmefan1946 wrote:

very elegantly and efficiently for sellers -- the site collects the VAT directly from the buyer at the point of sale, and remits it to the respective countries.  The seller never has to get involved.  The VAT paid by the buyer is recorded in the transaction details for informational purposes.  

Rather like the GSP.

And we all know how popular and well understood that is.

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No, actually, not at all.  There are no unfair middleman charges involved (i.e. Pitney-Bowes), which was a big (and reasonable) complaint about the GSP.  Nor are Europeans generally as unschooled in the realities of international taxation as Canadians tend to be.  This was, I think, fully borne out in many of the scathing comments by Canadians on the GSP-related boards who misunderstood the realities of cross-border taxes.  

In effect, thanks to laissez-faire CBSA collection, Canadians had been getting away with murder for a long time and came to think of it as an entitlement.  I don't think European countries have been quite so lax about import taxes, and European buyers are by and large more aware of their liability to pay such taxes. 

An additional issue that angered Canadians who otherwise would have accepted the GSP was the outrageously bad handling and sloppy re-packing of parcels at the Kentucky hub.  I've been on the receiving end of one of those myself. 

In any case, on that particular site the VAT, and nothing but the VAT, is charged and collected by the site itself, without any fees or intermediary costs.  The seller is in charge of the packing and shipping.  

[pierrelebel]

rose-dee -  " Simply consider the listed price of the item to include GST/HST (which is what I'd plan to do), and break it out manually for your own records and purposes of remittance?  "

From its inception over twenty-five years ago, I sold everything on a GST/HST included basis when dealing with Canadian consumers on eBay, other venues or my website.(for some direct wholesale transactions with other GST/HST registered sellers (dealers and wholesales), then the GST/HST was added so the dealer or wholesaler could get his ITCs)

The tax calculations are not that complicated.

"Presumably in the case of (b) above, the buyer would never know they had saved anywhere from 5% to 15%, depending on their location"

ALL my listings on eBay and elsewhere and price lists on my website clearly indicated that I was paying GST/HST on behalf of Canadian buyers.

It worked for me in an competitive industry where most Canadian competitors also sold on the basis they were absorbing the tax.

[rose-dee]

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@pierrelebel wrote:

From its inception over twenty-five years ago, I sold everything on a GST/HST included basis when dealing with Canadian consumers on eBay, other venues or my website.

ALL my listings on eBay and elsewhere and price lists on my website clearly indicated that I was paying GST/HST on behalf of Canadian buyers. 

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Thank you Pierre, this is precisely what I intend to do.  Since most of my competitors are in the U.S. and I know that any Canadian buying from them is paying the ca. 25% currency differential, being able to advertise "GST/HST included" may (I'm hoping!) actually encourage a few more domestic sales. 

My only remaining concern would be how to reflect this at my end of these transactions.  I imagine I'll have to break out the tax on each such sale and record the sales price and tax amounts separately.  

"(for some direct wholesale transactions with other GST/HST registered sellers (dealers and wholesales), then the GST/HST was added so the dealer or wholesaler could get his ITCs)"

Yes, a good reminder for those for whom this would apply. 

[ricarmic]

As a note Rose, if you are generating a receipt, for the Canadian customers, you also need to put your own GST number on the receipt as well....

[pierrelebel]

" being able to advertise "GST/HST included" 

I most strongly suggest you do NOT advertise "GST/HST included." 

This would invite American and overseas buyers to ask for a rebate for the tax since it is included in the price they pay.

 It is easier to stick to the "no tax added for Canadian buyers" or "I absorb Canadian taxes if applicable"

Good Luck

[reallynicestamps]

Ok I called eBay was transferred to upper management and

Errr-- did you mean you got the customer service clerk's supervisor at the call centre in Utah?

[fiaspice]

I just got the message. Being in Quebec, paying almost 15% is not fair (when you see other province at 5%). I have to now factor this in my prices. For someone who is a "casual seller" this is a lot to take in on top of PayPal fee, Final value fee, Final value fee on shipping.

[pierrelebel]

" paying almost 15% is not fair"

Call your provincial member of l'Assemblee Nationale and complain.  They make the laws and impose tax rates.

[cumos55]

You will have to register as a business in your province...  You will get a federal business number for your provincial business. ..  This number becomes your GST/HST business number ...

Confirm with your provincial authority for businesses that this what is needed.... Each province might be different......

In your situation  you can set up a Table  for GST/HST on eBay...  

Your Canadian buyers will   be levied the appropriate number for the tax on the total cost of price of the item plus postage.....  This will be your best option,  the tax table on eBay...

You will have to make note of this collection of GST/HST  on each of your listings...for Canadian buyers only, as I have noted below...

GST/HST is applied to all purchases by Canadian buyers.

If you list a book... the buyer will be charged GST or HST...  Buyers in an HST province  can apply for a refund of the provincial component of HST, but I doubt a buyer will do that 

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I sell books...  The tax specifically HST  is different for books than  the cost of shipping....  Books are exempt from the provincial component of HST.

So, I have to include the tax in the listed price for all listings.    eBay does not allow for the calculation of a different tax level on the purchased item as opposed to the cost of shipping

At the bottom of each listing I state............

Canadian residents --- The applicable rates for PST and GST/HST are included in all prices.

This statement is similar to what Pierre added to each of his listings...He was my visual source of what I had to do 

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A US buyer once did ask  for a clarification of this statement...  

My response is that I buy to sell and pay taxes on these purchases of items to sell, on supplies and postage.

I then allocate this personal payment of taxes, the Input Tax Credit  ....  as taxes....  to purchases by Canadian buyers.... and by definition I pay for the taxes owed by Canadian buyers for item purchased...  Canadian buyers do actually pay the taxes on postage

The reality is that Canadian buyers do pay taxes  that are included in the cost of the item purchased.

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When GST/HST is included in the price of an item  the tax is as follows.....

GST on the purchases is calculated as  [ 5 /(5 + 100) ]  x 100 = 4.76 % of the item price

For HST

Ontario  [13 / (13 + 100)] x 100 = 11.5 % of the item price

For HST equal to  15 % provinces  [15/(15 + 100)] x 100 =  13.0 % of the item price...

[cumos55]

If I was able to use the Tax Table on eBay... I would use it 

That would have been my choice for charging GST/HST on purchases and shipping cost  for Canadian buyers only

[reallynicestamps]

Remember that the tax is on the fee not on the sale.

If your monthly fees are $20 your tax would be $3, and your sales would have been $100.

Subtract the amount you paid for your sold items and you have your profit.

[pierrelebel]

Since all my Canadian stamps were listed on eBay.cafr (eBay-Canada French) in Canadian dollars, searchable sub-titles are free and I generally used the following sub-titles:

Price in CANADIAN dollars + FREE Shipping + NO GST/HST

or

Pierre J LeBel Offers You FREE Shipping and NO GST/HST

I would not use "GST/HST included".

[rose-dee]

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@ricarmic wrote:
As a note Rose, if you are generating a receipt, for the Canadian customers, you also need to put your own GST number on the receipt as well....

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Oh yes, thank you, I know.  Ironically when I worked as a paralegal in commercial law I had to set up all the documentation for a lot of local companies, both incorporated and sole proprietorship types, and I actually did most of this initial work for them, including the GST registration forms.  I can even recall in my letters reminding them of the very thing you mention (LOL).  

When I began my own business, I never wanted to have to get involved in all the GST mess myself, although in retrospect I probably could have benefited from ITCs over the years if I had.  It was just one more layer of paperwork I was happy to avoid.  After so many years of dealing in mountains of paperwork in some of my previous vocations, I have very little tolerance for it anymore.  Shoemaker's shoes, plumber's pipes, I suppose. 

[rose-dee]

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@pierrelebel wrote:

I would not use "GST/HST included".

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Excellent point, thank you!  

I'm thinking of using .cafr again for the free subtitles, so I might do the same as you did (I had listed on .cafr for some time, before I switched most listings over to .com).   

[pierrelebel]

"so I might do the same as you did"

Great idea but... please... do not use my name! 

[ricarmic]

Remembering that I sell on .COM and my target is folks in the USA.

I do not have anything in my listings saying anything about Canadian taxes. (because that just tips folks off that I'm not in the USA, it is surprising how many US buyers are still surprised that I'm not in the US!!!)

My receipts spell out the taxes for the Canadians of course, and if any Canadians happen to wait to pay and ask about taxes (I do not remember the last time that ever happened!!!) I tell them that the taxes are included.

(I also use the free shipping and all relevant taxes are included as a comment in "best offer" negotiations)