eBay

pcdorney1 · ‎05-30-2023

Hi,

I just recently sold something on eBay (to someone else in Ontario) and before that it was years since I sold anything so a lot has changed. But I noticed something strange. eBay collected taxes on the tax on the shipping then charged eBay fees on both the shipping and collected taxes then taxed the eBay fee.

For example:

In Ontario the tax rate on most things is 13%.

When it costs $10 to ship something I'm charged an extra $1.30 in taxes at the post office for a total shipping cost of $11.30. So on eBay the seller will need to pay me $11.30 for shipping.

So far the government has collected $1.30 tax on the $10 or 13%.

Then when eBay collects the money from the buyer they charge the buyer 13% tax on the total collected including shipping and the taxes on shipping. I never see this money. It passes from buyer to eBay who (I hope) is passing it on to the government. So at this stage eBay will send the government: ($10+$1.30)x13%=$1.47.

So now for the initial $10, $2.77 or 27.7% has been collected in taxes.

Then eBay charges an eBay fee on top of the total amount including the shipping, tax on "shipping" and tax on "shipping and tax on shipping". For the item I sold it was 13.25% though I guess it can vary depending on the category of the item. In this example the ebay fee on the shipping and related taxes would be: ($10+$1.30+$1.47)x13.25%=$1.69.

I'm not sure if eBay is supposed to be charging a fee for collecting taxes?

Then eBay charges me 13% on the ebay fee (so a tax on the fee on the shipping, tax on "shipping" and tax on "shipping and tax on shipping"). In this example the tax on the part of the ebay fee related to shipping and related taxes would be: $1.69x13%=$0.22.

So total tax paid on the initial $10 for shipping is $2.99 or 29.9%.

Does this seem strange to anyone else?

mrdutch1001 · ‎05-30-2023

"...it was years since I sold anything so a lot has changed...."

Yes indeed!... many changes over the years, including the taxation processes. After such a lengthy absence, did you not research what the fees would be BEFORE you listed items?

These taxation processes have been in place long enough now that any seller should be aware of them and know exactly what they are working with when selling on eBay...

pcdorney1 · ‎05-30-2023

Yes I did. And I'm not unhappy with the transaction or the money I received from it.

My question is more related the strangeness of the whole thing and any legal implications of taxes on taxes on taxes and fees charged to collect taxes and how all that fits with the tax laws of Ontario and Canada. And no I haven't researched tax law. 😅

mrdutch1001 · ‎05-30-2023

eBay sellers debated this topic of "legal" for many, many months so I'd suggest you read up on how the Canadian taxation process works for Marketplace Facilitators such as eBay, as well as eBay's implementation of how fees are charged...perhaps research some of the forums from the past 1-2 years to gain further insight.

pcdorney1 · ‎05-30-2023

I did see some of those threads. The ones I saw were more focused on the so-called double taxation of the whole amount (not just the shipping). In that case they talked about taxes on ebay fees on taxes. And as you said it was debated. And I didn't see any legal evidence or references presented one way or the other.

And I couldn't find a thread that mentioned the tax already paid at the post office (when shipping within Canada) and how that tax is taxed then taxed again (through the ebay fees). Though that "taxed again through the ebay fees" part would be covered in those other discussions.

pcdorney1 · ‎05-30-2023

I did a test on Amazon.ca. I went to their marketplace and chose an item shipped from Canada. I saw that in the case of an item shipped within Canada, Amazon taxes the shipping fee (which should include tax already).

So it seems that eBay is not alone in this practice. So maybe it's not so strange.

mrdutch1001 · ‎05-30-2023

ALL Marketplace Facillitators(eBay, Amazon,Etsy,etc,etc) are required by Canadian law to collect the applicable taxes on goods sold on these selling sites-those taxes are charged on the transaction(the transaction includes item price & shipping price). It is important to understand the taxation process.

rocketscollectibles · ‎05-30-2023

I already pointed this loop a few times.

This is cause by the fact that the shipping is considered like it's reselled. No wonder why some sellers try to exploit shipping cost by overcharging and do money on that. It's like you pay shipping, pay your taxes. Then resell shipping, buyer pay taxes. It's like two different transactions. And eBay charge fees on any money they handle.

We're indeed getting rekt from every side. Taxes, selling fees, and shipping represent around 40% of what buyers pay. When i see my total sales and the amount my buyers paid, versus my net sales, i cringe everytime. When we think only one year ago there was no taxes, i see hundreds and hundreds getting collected that was in my pockets. Buyers don't pay more, they just looking to pay less to cover taxes, sellers takes a big part of the losses.

mandicrafts · ‎05-31-2023

If you register for HST/GST you can claim back any taxes that eBay charges you.
As a side note, as a registered HST seller, when I used to charge and collect and remit the taxes from the buyer, eBay STILL charged the FVF on those taxes that I collected LOL!

reallynicestamps · ‎05-31-2023

Sometimes the tax is on the goods.

Sometimes the tax is on the service.

Sometimes the tax is on the entire payment.

When the wholesaler imports goods, they are taxed.

When the wholesaler sells those goods to the retailer, they are taxed.

When the retailer sells those goods to the customer, they are taxed.

When the customer sells those used goods to another customer, they are taxed.

rocketscollectibles · ‎05-31-2023

.

kenneth686321 · ‎06-01-2023

@pcdorney1

Don't forget to put $11.30 as your shipping cost not $10 in your listing. Remember when you go to the post office you are handing over $11.30 to the clerk to ship your item.

There are 3 different transactions going on here in your example. Each transaction is taxed ONCE.

TRANSACTION 1. The BUYER is paying YOU $11.30+ $1.47 HST TAX (13%) to ship them the item. They are buying a productwhich is taxed. Transaction handled by Ebay

TRANSACTION 2: YOU are Paying Canada Post $10 + 1.30 TAX (13%) to ship the item to the buyer. You are buying a servicewhich is taxed. Transaction handled by Ebay if you buy Ebay label OR Canada Post if you buy directly from the Canada Post counter assuming same price

TRANSACTION 3: YOU are paying Ebay $1.69 + $0.22 HST TAX (this is the shipping portion of the FVF) to be able to sell your junk on their site. You are paying for a service which is taxed. Transaction handled by Ebay.