Managed Payments - Ebay Charges 12.3% on Canadian Sales Tax!

[westcoastart2]

Ebay just put my account into Managed payments and I had my first sale that way.

As a Canadian business seller I have to collect GST, PST or HST depending on which province I'm shipping to

Prior to Managed Payments, ebay charged their selling fee (about 10%) on the sales price, and the shipping cost.   Ebay did not charge a selling fee on the sales taxes that I have to collect on behalf of Revenue Canada and remit to Revenue Canada.   Paypal charged their 3% ish fee on the total amount they handled

With managed payments - ebay charged 12.35% (which is a little less than the prior combined ebay and paypal fees)

BUT and its a BIG BUT

Ebay is now charging that 12.35% on the item cost, the shipping cost AND THE SALES TAX

ie ebay is keeping 12.35% of the sales tax that is supposted to go to Revenue Canada

That sounds wrong to me.

[motomike_canada]

Yep. It's complete nonsense to collect a selling fee on taxes... but that's the new policy.

The not-so-fine print
The new final value fee is calculated on the total amount of the sale, inclusive of tax, shipping or handling, and any other applicable fees. The old final value fee was calculated on the total amount of the sale, excluding tax. With the old final value fee, you also had to pay a separate payments processing fee to a third-party based on the total amount of the sale, including tax.

https://pages.ebay.ca/seller-centre/service-and-payments/simpler-fees.html

I also don't agree with them keeping any % on the shipping when it's calculated by ebay  either.. I just had an order for a large item to Alaska, customer paid $98 which means I get 85 ish, and actual shipping cost was a bit higher at $115 with insurance... 

[marnotom!]

How does this compare to the days prior to Managed Payments when you were charged FVF on the final sale price plus shipping and PayPal charged its fees based on the total transaction value, which would have included sales tax?

My impression from a few posters who have been using Managed Payments for some time is that it's better to focus on the total transaction charges you're facing with the new system rather than focus on one or two components.

[motomike_canada]

Well, it will cost me more, they even give an example of a similar situation to mine on their page here:

https://pages.ebay.ca/seller-centre/service-and-payments/simpler-fees.html

except they show the store only collecting 5% GST (I'm in Ontario and collect HST/GST) :

Fees then
$2,242.40 monthly average

Fees now
$2,255.70 monthly average

*In this example we assume that the number of transactions is 400 and that the amount of sales tax collected is $2,600.

If I'm collecting upwards of 15% HST depending where it's going, collecting more taxes per month than their example, it means that it will cost me more than that still..  

Granted, it doesn't look like much, but sure feels slimy especially when it's touted as "simpler" and "cheaper for most sellers" 

  Paypal took their ~3% from total transaciton for processing (like any credit card processor) 10-12% from tax is unnecessary and avoidable, and if you miss the "NOT SO FINE PRINT" it makes the new fees seem quite a bit lower than eb+pp if you only read their infographics and don't actually read the text spread across multiple pages. 

https://www.ebay.ca/help/selling/selling-fees/store-fees?id=4809

[lotzofuniquegoodies]

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@motomike_canada wrote:

Well, it will cost me more, they even give an example of a similar situation to mine on their page here:

https://pages.ebay.ca/seller-centre/service-and-payments/simpler-fees.html

except they show the store only collecting 5% GST (I'm in Ontario and collect HST/GST) :

Fees then
$2,242.40 monthly average

Fees now
$2,255.70 monthly average

*In this example we assume that the number of transactions is 400 and that the amount of sales tax collected is $2,600.

If I'm collecting upwards of 15% HST depending where it's going, collecting more taxes per month than their example, it means that it will cost me more than that still..  

Granted, it doesn't look like much, but sure feels slimy especially when it's touted as "simpler" and "cheaper for most sellers" 

  Paypal took their ~3% from total transaciton for processing (like any credit card processor) 10-12% from tax is unnecessary and avoidable, and if you miss the "NOT SO FINE PRINT" it makes the new fees seem quite a bit lower than eb+pp if you only read their infographics and don't actually read the text spread across multiple pages. 

https://www.ebay.ca/help/selling/selling-fees/store-fees?id=4809

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Canadian sellers who still are able to list on dot com will also be paying more in fees due to increases in certain categories with the Spring Update Announcement.

-Lotz

[recped]

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@westcoastart2 wrote:

Ebay is now charging that 12.35% on the item cost, the shipping cost AND THE SALES TAX

ie ebay is keeping 12.35% of the sales tax that is supposted to go to Revenue Canada

That sounds wrong to me.

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the 12.35% is not part of the sales tax any  more than PayPal's 2.9% was part of the Sales Tax.

In the case of GST/HST eBay doesn't collect this at all, sellers collect and remit and of course there is no way to deduct any of your costs of collection.

You are also paying the same fees on US Sales Tax, AU & NZ GST, UK VAT, and as of July 1st EU VAT.

[motomike_canada]

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@recped wrote:

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@westcoastart2 wrote:

Ebay is now charging that 12.35% on the item cost, the shipping cost AND THE SALES TAX

ie ebay is keeping 12.35% of the sales tax that is supposted to go to Revenue Canada

That sounds wrong to me.

---

the 12.35% is not part of the sales tax any  more than PayPal's 2.9% was part of the Sales Tax.

In the case of GST/HST eBay doesn't collect this at all, sellers collect and remit and of course there is no way to deduct any of your costs of collection.

You are also paying the same fees on US Sales Tax, AU & NZ GST, UK VAT, and as of July 1st EU VAT.

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No idea what you're trying to say. 

The fees are charged on the total amount including sales taxes now, where they weren't before. 

Before it was 2.9% paypal to process the payment. 

Now its (in this case) 12.3% that ebay takes.

If you sold a $1000 item and collected $130 in HST, eBay did not take FVF from it and you'd only have the paypal fee of 2.9% deducted, or $3.77

Now eBay takes upwards of 12.3% or $15.99 of the sales tax portion .. guess what, I still owe CRA $130. 

[fab_finds4u]

I don't  get it when PayPal  charges their fee it includes sales tax and nobody went nuts but eBay does it and all hell breaks loose.

Whoever is collecting and processing the payment from the buyer, be it PayPal or eBay, it goes in the processor's account  and then the payment processor  has to dispurse the money to the various people  awaiting those funds.  If they waived the fee on sales tax then they'd be processing that part of the payment for FREE and I doubt they'd agree to perform a service for free. 

Fees HAPPEN.  Build the fee on sales tax into the asking price of your higher priced items. 

[ontlady]

My first sale since I moved to MP was not 12.35% as Ebay says that Ebay fees will be the same or even lesser than before.  I calculated the amount of fees collected was 16.368%!  I phoned the customer service and I was told that I pay more fees because I sold under eBay.com.  I can't get a clear answer from this person who took my call.  He said I have to pay VAT.   I'm a resident of Canada. Why will I pay the VAT for a US Buyer?  Can someone explain how this was calculated?  Sold at $89.99 USD (free shipping HST included) and eBay fees $14.73 USD.  If I calculate this as 12.35%,  it will be $11.12 + $0.30 per order + HST $1.48, should only be $12.90 USD.  Did I miss anything?  

[marnotom!]

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@ontlady wrote:

Did I miss anything?  

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Does the buyer have to pay Internet Sales Tax on their purchase?  eBay will collect and remit that tax, but my understanding is that it still adds to the total sale amount and needs to be considered when making your calculations.

I'm guessing that the "VAT" that the customer service rep was referring to was the HST that you've included in your calculations.

[marnotom!]

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@fab_finds4u wrote:

I don't  get it when PayPal  charges their fee it includes sales tax and nobody went nuts but eBay does it and all hell breaks loose.

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Actually, there were a lot of concerns expressed on this board when eBay had to start adding Internet Sales Tax to many purchases from US buyers and PayPal charged its fees on the total transaction value, which includes those taxes.

[lady.stark]

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@fab_finds4u wrote:

I don't  get it when PayPal  charges their fee it includes sales tax and nobody went nuts but eBay does it and all hell breaks loose.

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There is a HUGE difference between a 2.9% fee and a 12.35% fee on those taxes (first one PP and second eBay)...

[motomike_canada]

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@lady.stark wrote:

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@fab_finds4u wrote:

I don't  get it when PayPal  charges their fee it includes sales tax and nobody went nuts but eBay does it and all hell breaks loose.

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There is a HUGE difference between a 2.9% fee and a 12.35% fee on those taxes (first one PP and second eBay)...

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Exactly.    

If someone walks into my store, I pay around 3% to process with Moneris (INCLUDING TAX) ... so as a simple transaction fee, it's one thing.  Annoying but it's been like this forever. before the internet even! 

As a Final Value Fee it's ridiculous. 

[reallynicestamps]

Yep. It's complete nonsense to collect a selling fee on taxes... but that's the new policy.

Paypal took their ~3% from total transaciton for processing (like any credit card processor)

The fee on sales tax is based on exactly that-- the Standard Practice of credit card companies, which base their fee on the total transaction not just the purchase and shipping prices.

[motomike_canada]

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@reallynicestamps wrote:

Yep. It's complete nonsense to collect a selling fee on taxes... but that's the new policy.

Paypal took their ~3% from total transaciton for processing (like any credit card processor)

The fee on sales tax is based on exactly that-- the Standard Practice of credit card companies, which base their fee on the total transaction not just the purchase and shipping prices.

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sure... but is it a processing fee or a final value fee?  eBay is trying to obfuscate what the difference is so they can get another chunk of money they're not entitiled to in my opinion. 

If Moneris suddenly charged me an extra 10% to process cards, they'd get dropped like a hot potato.  Seems like eBay decided they want a monopoly so they don't have to play fair. 

I collected almost $15,000 in canadian taxes on eBay sales last year..  Once I get forced into MP, I guess all my prices are going up another 13% .. that should really help me stay competitive, as if we're not already at a disadvantage in Canada. 

[marnotom!]

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@motomike_canada wrote:

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sure... but is it a processing fee or a final value fee?  eBay is trying to obfuscate what the difference is so they can get another chunk of money they're not entitiled to in my opinion. 

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Well, you have to admit that 12.35% is pretty odd percentage either way you look at it.  I'm guessing that some number-crunching was done with the typical breakdown of fees for a sale and some suits decided that a 12.35% commission would best cover the split between eBay's share of the sale and the amount they needed to process the payment.

[westcoastart2]

I'm not so sure about your reference to sales tax outside of Canada.

Those amounts used to go through my paypal account, and be instantly redirected to ebay (after paypal took their 3% ish).

I'm assuming (maybe incorrectly), that the non canadian sales tax will not go through my account.

The issue is I don't care about foriegn sales tax, because I don't have to collect it and pay it (ebay does that).     IF ebay collects $100 NY sales tax, and keeps $12.3 for themselves, and only gives $87.7 to NY state, that doesn't concern me.     That is between NY state and Ebay.

However if a Canadian pays me $100 HST and ebay keeps $12.3 for themselves, and only gives me $87.70, it seems to me I still own Revenue Canada $100.     Now ebay doesn't care, because I'm the one who has to pay Revenue Canada, not ebay.

[westcoastart2]

You sound like someone who doesn't have to collect and remit sales tax in Canada.

There was a big fuss about paypal charging fees on sales tax.    Even ebay told me they were trying to get paypal to stop that.

There is a bigger fuss because most of us agree that a service charge is acceptable (ie credit card fees etc).     There are the fees paypal charged, plus their profit - which was around 3%.

Now ebay comes along, and decides to charge 12.3% for something paypal was doing profitably for about 3%.   That is the fuss.     Ebay is making an exhorbitant profit from their monopoly position.      To make it even worse, they are doing it on tax funds that our just passing through the sellers hands.     The sellers are doing the work collecting and remitting the sales tax - and ebay is taking the money.

[westcoastart2]

Yes you missed something - we all did.     The only thing I can suggest is look at the category you used - some categories have higher fees than others.      If that doesn't explain it, then its another ebay scam.

[westcoastart2]

My guess is marnotom does not collect sales tax in Canada.