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It's 100% true, as the policy currently stands the "simplified" fees with apply to the total transaction value (item+shipping+tax).
I can't find the page that I read this on but it was crystal clear and spelled out in detail.
ANY tax!
And here's another thing for which I have not seen a definitive answer. It would only affect sellers NOT registered for GST/HST.
Today, eBay charges sellers GST/HST on all their fees, PayPal because they offer "financial services" are zero-rated for GST/HST.
Under Managed Payments "simplified" fees I'm wondering if eBay will charge GST/HST on the entire simplified fees or if they will charge only on the Item selling price. I expect that once they mix the two the zero-rated payment processing portion WILL be subject to GST/HST.
For sellers who are registered with the Feds it doesn't really matter since all tax paid is an ITC and is refunded but for sellers who are NOT registered there will be yet another added cost.
Currently
Item FVF is taxable
Payment processing not taxable
Under Managed Payments
Single FVF fee, probably all of it taxable.
I'm registered so for me it's just all an ITC and a wash that costs me nothing but others need to know that the 2.35 (or 3.35 for International) may be subject to 5 - 15% GST/HST.
Just another thing that is going to make "most sellers will save money" a completely bogus statement.
Re GST/HST on the payment processing portion of eBay fees
But we don't know yet for sure how eBay Canada will handle this, there is no equivalent in the USA and even if there was the "simplified fees" haven't happened yet.
It will be an issue on eBay.de, I'm not 100% sure but I think that VAT is similar to our GST, financial services are zero-rated.
The only similar situation I'm familiar with goes back many years and had to do with Canadian Customs and how they applied tarrifs to "handling charges" as a separate line items (tariff applicable) vs "handling" rolled in to the line item for "shipping" (tariff exempt) (this was all long GST during the time of Federal Sales Tax (15% back then) applied at the manufacturing level. I was an importer back then so the 15% tax applied to the landed price but shipping charges were exempt.
That all went away in 1991.....thanks Brian!
I actually did thank Mulroney at the time (not for anything else) because businesses with inventory got a rebate of all previous paid FST on current inventory, that was a 15% bonus that at the time meant a 6 figure cheque from Ottawa (and it couldn't have come at a better time for me as it was bad times in my business in the early 90's.
I'm not sure if anyone at eBay has even considered this issue, not sure how much of the design of the Canadian version of MP has had input from the Canadian office who might have had a inkling of the subject.
Maybe you can shed some light on these questions. If taxes are charged on the full simplified fee the change from the current system would go like this (for sellers located in Ontario and NOT registered for GST).
eBay with PayPal
10% FVF, 2.9% + $0.30 payment fees + 13% GST applied to the 10% portion only
Sample - $20 Sale
FVF - $2.00
PP - $0.59 (2.9%+0.30)
GST @ 13% - $0.26 (ON Rate)
Total: $2.85
eBay with Managed Payments
Combined FVF 12.35% + $0.30 + GST applied to the entire fee
Sample - $20 item
FVF - $2.47
GST @ 13% - $0.32
Total: $2.79
Those "savings" are getting eaten up with these little "quirks".
Second issue which WILL affect me negatively.
Then there is the GIANT "quirk", if you apply the "simplified" fee to the gross amount of the transaction including taxes (Canadian and to a lessor degree US).
A GST registered seller might avoid the extra fee on payments because they can use that as an ITC while at the same time they are getting smacked by having to pay a new 10% fee on the 13% GST they have to charge Ontario buyers, this is a 1.3% hit to my bottom line and in my case wipes out ALL financial benefit for MP (and MORE!).
If there is anything that's not clear or if my math has mistakes just let me know because both could very well be possible!
The last word on Canadians listing on .com is that eBay "is actively seeking a solution to allow deposits to US based accounts".
I might have the wording slightly wrong but it was clear that eBay knows it's a significant issue that they need to get right.
I didn't want to clutter up my sample with International, my initial calculations show that International will be cheaper than PP for everyone.
The MP rate is 13.35% or $3.35% if you get rid of the 10% old FVF (plus 30 cents of course), since taxes are only charged for Australia currently that lower than PayPals 3.9%
For the USA the MP rate will be 2.39% vs PayPal at 3.7% so on that there is plenty of headroom to cover most if not all of the tax on tax thing.
I have not finalized my spreadsheet that hopefully will account for almost any variation but initially it looks like this:
For sellers listing on .ca
International - Cheaper for sure
USA - from the same to slightly lower
Canada - Higher, possibly by a lot
Oh yeah here's another thing to factor in, you know how the fees on shipping are based on your lowest domestic shipping rate? I'd bet anything that is going to change to "whatever the buyer pays". If that change happens it will negatively affect some sellers, me I charge the same amount for US/Canada but I do save on single item International purchases because my overseas shipping is twice as much as the domestic which the fees are based on.
The only people "simplified" will be new sellers who have nothing to compare too, for the veterans among us the comparison of old vs new is actually anything but simplified.
Caveat - My numbers could be off at this point, I do plan to post actual hard numbers once a few details are revealed and I can spend the time staring at spreadsheet formulas. ( that won't happen for a couple of weeks as I'm going off to social distance by a few hundred miles!).
@recped wrote:
[edited for brevity]
Maybe you can shed some light on these questions. If taxes are charged on the full simplified fee the change from the current system would go like this (for sellers located in Ontario and NOT registered for GST).
eBay with PayPal
10% FVF, 2.9% + $0.30 payment fees + 13% GST applied to the 10% portion only
Sample - $20 Sale
FVF - $2.00
PP - $0.59 (2.9%+0.30)
GST @ 13% - $0.26 (ON Rate)
Total: $2.85
eBay with Managed Payments
Combined FVF 12.35% + $0.30 + GST applied to the entire fee
Sample - $20 item
FVF - $2.47
GST @ 13% - $0.32
Total: $2.79
Those "savings" are getting eaten up with these little "quirks".
Second issue which WILL affect me negatively.
Then there is the GIANT "quirk", if you apply the "simplified" fee to the gross amount of the transaction including taxes (Canadian and to a lessor degree US).
A GST registered seller might avoid the extra fee on payments because they can use that as an ITC while at the same time they are getting smacked by having to pay a new 10% fee on the 13% GST they have to charge Ontario buyers, this is a 1.3% hit to my bottom line and in my case wipes out ALL financial benefit for MP (and MORE!).
If there is anything that's not clear or if my math has mistakes just let me know because both could very well be possible!
Hi @recped - I know I sound like a broken record, but I have to emphasize that the details I have about the Canadian program are very limited and as such, most questions aren't going to be things I can answer, etc, etc. 🙂
That being said, I can provide some insight on the way these types of scenarios are being handled within the .com program, details follow:
Currently the US program has announced that the new Final Value Fee structure happening in July will be based on total buyer payment inclusive of sales tax.
When it comes to GST - I do not have full clarification on this, but based on what I'm seeing this is less a combination of two fees (Final Value Fee and processing fee) but a complete 'rebrand' of the Final Value Fee to also include a percentage for processing (I know that seems like splitting hairs). With that in mind my guess is that GST would be charged on the total Final Value Fee percentage without breaking it out - so scenario 2 in your example.
As I get more information I'll definitely share it, but please remember that my visibility into this topic is limited. In fact, if you have received an invite to payments you probably have access to more information than I do. Thanks!
Hello Tyler,
Most of the frustration from Canadian sellers is asking them to sign up for something eBay Canada does not have all the answers for. Many of these same questions have been brought up shortly after Managed Payments was announced as coming to Canada. It's like asking someone step into a sinkhole without knowing how deep it is.
-Lotz
The announcement made no effort to define what exactly constitutes an international transaction.
Basically it's exactly the same as PayPal.
An International transaction is any order that a) ships to a location outside your home country or b) is bought by a buyer located outside your home country.
For Canadian sellers there are "special" rates for sales to US buyers, which are about halfway between the domestic rates and foreign rates.
Although the fees are different under MP the way an "international" transaction is defined is exactly the same as under PayPal.
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