Sales tax on shipping cost

[aramatic]

How is eBay able to collect sales tax on the shipping cost? I've just sold an item for $5 + postage $17.90 (yes, Canada Post at work) = $22.90 on which eBay has slapped 12% for the buyer. $2.75 tax on an item worth $5??

[mrdutch1001]

did you not read all the info regarding the sales tax process?

The buyer pays the sales tax/Hst as per the buyer's provincial sales tax and the seller pays fees on the TOTAL of the TRANSACTION.

[lotzofuniquegoodies]

@aramatic 

If the shipping was to USA or Internationally there  would not add tax to the postage. eBay's explanation is tax is on the entire transaction. Fuzzy explanation at best.

-Lotz

[aramatic]

How is this ethical? The postage is not part of the value of the item on which sales tax is based. I'd also like to see an audit of where this money goes, just as I'd like to see an audit of where the so-called "import charges" go that are part of the awful Global Shipping Program.

[regs43]

Before ebay started collecting tax I did it myself. GST/HST is collected on the item and the shipping the buyer pays. The shipping is a service and is subject to GST and not just the item. So in your transaction I would have collected 5% to your buyer (as they sound like they are in BC) for the full $22.90

With the new system ebays collecting taxes and I assume the PST portion is part of it now as per the provinces wanting thier cut withought really being HST provinces lol. Not sure, but ebay as Lots said, its on the whole transaction which I agree its fuzzy!

[mrdutch1001]

eBay hasa said this about the taxation process:

"eBay will be collecting the GST/HST/PST/QST on all intra-Canada transactions beginning on this date and remitting the tax collected to relevant government or taxation agency.

if a Canadian seller is required to collect GST/HST/PST/QST, fees are imposed on the total sale price paid by the buyer, inclusive of shipping and taxes. This is the same for a Canadian seller concluding a transaction in the US, where sales taxes may be due on the transaction. Fees will continue to be imposed on the total sales price. Note that any sales tax/GST/HST/PST/QST collected is immediately placed in a liability account whereby eBay pays the relevant government or taxation agency.

eBay is implementing and utilizing third-party taxation systems to differentiate tax exempt goods from each other. We will have an entire list of exempt items and rules at the Federal and Provincial level.  

Note that most used items are subject to the tax. The requirement for taxation is based on the transaction, not the item. The buyer in each individual transaction separately pays the GST/HST/QST/PST as applicable."

[reallynicestamps]

How is eBay able to collect sales tax on the shipping cost?

The GST is a Goods and SERVICES  tax.

Shipping is a service for which you charge your customer and then package and ship paying Canada Post (or UPS etc) to do the actual delivery.

And since it usually comes up, we pay FVF for processing not on the selling, shipping or taxation amounts.

Managed Payments, like Paypal and, if you have ever held a merchant credit card account, Moneris, all do the same, charging their fees on the payment not on how the payment is put together.

We got our first Chargex machine circa 1980 and it was Standard Practice then, forty years ago.

[lotzofuniquegoodies]

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@reallynicestamps wrote:

How is eBay able to collect sales tax on the shipping cost?

The GST is a Goods and SERVICES  tax.

Shipping is a service for which you charge your customer and then package and ship paying Canada Post (or UPS etc) to do the actual delivery.

And since it usually comes up, we pay FVF for processing not on the selling, shipping or taxation amounts.

Managed Payments, like Paypal and, if you have ever held a merchant credit card account, Moneris, all do the same, charging their fees on the payment not on how the payment is put together.

We got our first Chargex machine circa 1980 and it was Standard Practice then, forty years ago.

---

One difference with the past and now with these fees for CC's etc is that for B & M's they rationalized it as a cost of doing business...A service. Forward to now, most businesses including Mom & Pop's can't afford to eat that cost so they pass it on directly to customer at the machine or build it into their pricing. Hidden but still there. My local barber....cash only. Not convenient for customers but helps owner keep prices lower than everyone else.

-Lotz

[recped]

Because shipping is taxable, always has been for GST/HST and at least for Ontario was taxable when there was PST (pre-1991).

[marmesza_0]

Yes you are so right shipping is taxable , so tell me this Ebay puts taxes on shipping --RIGHT''? you go and mail the item buyer paid for you paying for shipping --now ---get this--- Canada Post charges you tax again for shipping you pay---it is called double dipping ---think about it --you don't have to have your Masters to count this sinple calculation--- most sellers don't get it,,,I don't know why? but you don't need to be an accountant , DO YOUR MATH ---DOUBLE DIPPING IN SHIPPING TAXES ---- 

[recped]

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@marmesza_0 wrote:

Yes you are so right shipping is taxable , so tell me this Ebay puts taxes on shipping --RIGHT''? you go and mail the item buyer paid for you paying for shipping --now ---get this--- Canada Post charges you tax again for shipping you pay---it is called double dipping ---think about it --you don't have to have your Masters to count this sinple calculation--- most sellers don't get it,,,I don't know why? but you don't need to be an accountant , DO YOUR MATH ---DOUBLE DIPPING IN SHIPPING TAXES ---- 

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The tax you pay to Canada Post (GST/HST) is recoverable as an Input Tax Credit (same at the GST/HST eBay charges you on their fees).

You have to register with GST to get refunds of these ITC. In the past most small time sellers (below 30k gross revenue) did not register, it meant they could not get credit but did not have to change buyers tax themselves.

Now that eBay is charging GST/HST to ALL Canadian buyers there is no longer a reason NOT to register for GST. If you do you can get a refund for any GST/HST you paid out including shipping, cost of goods, eBay fees etc.

[aramatic]

"... we pay FVF for processing not on the selling, shipping or taxation amounts."  Not so....

"We charge one final value fee when your item sells.... This fee is calculated as a percentage of the total amount of the sale, plus $0.30 per order. The total amount of the sale includes the item price, any handling charges, the shipping service the buyer selects, sales tax, and any other applicable fees."

Originally shipping was not included but was added, so we were told, to deter sellers from setting a low item price and high shipping cost (Buy It Now $1, Shipping $99).

[lotzofuniquegoodies]

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@mrdutch1001 wrote:

eBay hasa said this about the taxation process:

"eBay will be collecting the GST/HST/PST/QST on all intra-Canada transactions beginning on this date and remitting the tax collected to relevant government or taxation agency.

if a Canadian seller is required to collect GST/HST/PST/QST, fees are imposed on the total sale price paid by the buyer, inclusive of shipping and taxes. This is the same for a Canadian seller concluding a transaction in the US, where sales taxes may be due on the transaction. Fees will continue to be imposed on the total sales price. Note that any sales tax/GST/HST/PST/QST collected is immediately placed in a liability account whereby eBay pays the relevant government or taxation agency.

eBay is implementing and utilizing third-party taxation systems to differentiate tax exempt goods from each other. We will have an entire list of exempt items and rules at the Federal and Provincial level.  

Note that most used items are subject to the tax. The requirement for taxation is based on the transaction, not the item. The buyer in each individual transaction separately pays the GST/HST/QST/PST as applicable."

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Any guesses as to what happens to the(any) IST credits if a seller is NOT registered with the CRA? Is it held on account or available as a gift certificate? 😯

-Lotz

[recped]

Any guesses as to what happens to the(any) IST credits if a seller is NOT registered with the CRA? Is it held on account or available as a gift certificate? 

You snooze you loose! Not sure what you mean by "held on account", I suppose you could think of it as the unregistered seller holding them until they register.

I know that a registered entity can use ITC's going back up to 4 years past the reporting period in which they were incurred. I think there is a shorter period (1 year???)  you can go back prior to your registration date.

In either case above one would need to check the current rules, my experience is from 20 years ago.

[howe_james]

  Let's put it this way to maybe grasp things easier.  As the seller you pay 5% G.S.T. on the shipping because it is a service in Canada. As the buyer, you pay 13 % H.S.T. on not just the item, but also on the shipping. The buyer is paying 8% (P.S.T. portion) more for the original shipping cost than the seller initially did. Does it sound like double dipping and a rip off? Well, that's because it is and unless there is a law our government suddenly came up with pertaining exactly to this (which I can'tfind), probably illegal too. I wonder how much just that 8% amounts to in just Canada on Ebay and Reverb.com as they do the same. I almost smell a class action lawsuit here unless someone can rationally and legally explain away what I've said. I can't speak for anywhere else other than Canada as the tax rules are different elsewhere. Now, let's ask where that money is going.

  I've talked to Reverb.com about this and so far have gotten nothing but deflection and the company line. My guess is the same at Ebay. I am going to contact the government to find out more as well, because I'm going to assume no one will want to own or be part of something that is way bigger and badder than it looks, yet not surprising.   

 Shipping should not be on the taxable part of an invoice to the consumer. Just remember this, EVERY TIME you buy something off Ebay or Reverb.com in Canada, the seller pays 5% tax for shipping and YOU pay 13% or whatever your provinces H.S.T. is for that same shipping. It's like charging the seller sales tax for selling. Leaves you feeling warm and fuzzy inside, doesn't it?

[byto253]

When you report business revenue to the CRA, it includes shipping.  That is not an eBay thing, it has always been that way.  You pay tax on shipping always.

[mrdutch1001]

"I almost smell a class action lawsuit"---

and another wishful thinking dreamer who thinks "class action lawsuits"  are the answer to everything they "think" is not appropriate/legal/to their liking,etc.

This is NOT unique to eBay...

I have done a lot of mail order over the years....taxes on shipping has been around several years already...

EX: recent order from a garden seed company includes taxes (GST & PST) on the TOTAL transaction, including shipping...

Get over it, move on because wishful thinking is exactly that - a mindless exercise in futility...

[kh-leslie]

Hi everyone,

Due to the age of this thread, it has been closed to further replies. Please feel free to start a new thread if you wish to continue to discuss this topic.

Thank you for understanding.