I am registered for GST/HST and 98% of my sales are on ebay. I was auditted this tax season. I prepare my taxes myself, so NOT a tax professional at all lol.
1. You need to fill out the joint election form with ebay (check the Canadian Tax forum on this site) and you will find the form and where to email to have ebay fill out their part. You keep this form in the event you are auditted and then supply it at that time. This just says ebays collecting the tax and not you for these sales.
2. If you sell at a garage sale, FB market place, kiji etc you would collect the tax (this tax you need to remit to the CRA since a digital marketplace is not doing it on your behalf)
3. When you file taxes annually it asks for Gross sales (and then how many are Canadian or 0 exempt (this is to USA international etc).
I SUSPECT this is why I was auditted as I reported Canadian sales as I normally did in the past (ebay plus other selling vanues) becasue I uesed to collect the tax. However I had no tax collected on thoese ebay sales since ebay does it now. She mentioned something about my refund ask was more then 30% of my Canadian Sales and tax I should have collected. The trigger for the audit (my best guess)
If you have good records the audits not that bad after the initial freak out period lol! I submitted what they asked for and 2 weeks later got my refund that I originally asked for. I fully anticipate I will be audited for a few years going forward or until they decide its a waste of time. I am kind of glad I was auditted as I was able to learn a few things and improve on the way I record things going forward so I dont need to backtrack to find info. I will also just prepare my taxes going forward with the info they ask for in an audit and be ready when they come calling.
Your post is excellent but I will quibble with statements like "I was audited this tax season. I prepare my taxes myself", referring to GST reporting as "taxes" could be misleading to some because GST reporting has absolutely nothing to do with Income Tax (personal or corporate) that are commonly referred to as "taxes".
In formal accounting methods GST collected is a Balance Sheet item not an Income Statement item, ITC's can appear on an Income Statement but only to reflect a reduction in expenses because of the ITC refund (the refund can either be an actual refund or just a credit against GST collected).
Of course in accounting there are always multiple ways to account and report activity, whatever works for you is fine as long as it is both accurate AND consistent from year to year.
Your post is excellent but I will quibble with statements like "I was audited this tax season. I prepare my taxes myself", referring to GST reporting as "taxes" could be misleading to some because GST reporting has absolutely nothing to do with Income Tax (personal or corporate) that are commonly referred to as "taxes".
In formal accounting methods GST collected is a Balance Sheet item not an Income Statement item, ITC's can appear on an Income Statement but only to reflect a reduction in expenses because of the ITC refund (the refund can either be an actual refund or just a credit against GST collected).
Of course in accounting there are always multiple ways to account and report activity, whatever works for you is fine as long as it is both accurate AND consistent from year to year.
I said I prepare my taxes myself and not I am not a tax professional to indicate I dont know everything ( a disclaimer).
The Auditor when she called did ask me if I had an accountant and then asked how I filed my personal taxes. So They did ask that information. I also right off the bat said I sell on ebay and ebay collects and remits the tax for my sales and I mentioned I have an election form for them to do so. That didn't stop the process.
She still wanted to see specific information about my Gross Sales and ITC's. There was things I didnt currently include in my records that i had to go back and add in (minor things but that they wanted to see, so it was some backtracking to pull out information to include with all the other stuff I already did). This was the nice learning part, so I can continue to do that going forward.
Are you registered for GST/HST sales tax collection ? Have you given eBay your tax number(s) ?
If you have not then ebay is not collecting the sales tax on your behalf -- they are collecting the sales tax under marketplace rules.
@3cthrifty
Even if you are registered to collect GST/HST it makes no difference at all, there is no need for you to report any of the tax amount that eBay collects.
1 - On a personal tax return it's completely irrelevant
2 - On a business tax return it's completely irrelevant
3 - If you are registered for GST/HST you do not report the amounts collected by eBay, you still report gross sales and utilize Input Tax Credits for any GST/HST YOU paid on purchases of goods or services such as shipping, eBay fees, goods for resale, a comfy chair to go with your desk etc. Any transactions not via eBay you would collect GST/HST and report as normal.
I'm 99.999% sure that eBay does not report ANY of the details of the transactions they collect GST/HST to the Canada Revenue Agency. Of course if CRA requests detailed information on a taxpayer eBay would hand it over.
Comment for anyone reading:
For any seller on eBay other than the strictly casual, registering for GST even when the $30,000 threshold is not met can be financially beneficial, there is no minimum if nothing else you can get a 13% (ON) refund on your eBay fees. One thing to consider is that yoiu would now have to collect and report taxes on any sales outside of a marketplace like eBay.
I have a sole proprietorship and I also just registered for GST/HST as my sales are about to exceed $30k.
If I understand you correctly,
- I do not need to remit GST to the CRA because Ebay already does this?
- Wouldn't this be cause for an audit?
I'm pretty green on this topic so any input is very much appreciated.
Standard disclaimer that I'm not a tax professional and you should consider everything said to be wrong and verify it for yourself.
You need to fill out the tax form and submit it to eBay who will countersign it. This is giving eBay permission to handle the taxes for you and provides you proof that they are being collected and remitted. Without this, eBay would still collect and remit the tax, but I believe you would ALSO be responsible for remitting it out of your own pocket.
Once that's done, you don't need to remit GST/HST for eBay sales, but you DO need to collect it and remit it for sales from other sources (like Marketplace, etc). Make sure you read up on how to provide proper receipts if you do. Depending on your location, you could also be over the threshold for collecting provinical taxes on non-eBay sales (or you may potentially need to sign up for provincial tax numbers even though you'd be submitting a null return with everything done on eBay).
Remember to keep track of the taxes you pay for things related to your business. Being able to claim the tax on business expenses actually puts quite a lot of money back in your pocket at the end of the year.
I have a sole proprietorship and I also just registered for GST/HST as my sales are about to exceed $30k.
If I understand you correctly,
- I do not need to remit GST to the CRA because Ebay already does this?
- Wouldn't this be cause for an audit?
I'm pretty green on this topic so any input is very much appreciated.
I have two GST accounts, one since the inception of GST in 1991, the second one (operating as a different business) since 2001.
On the old one I have not reported any GST collected in at least 20 years but I always have had a few ITC's to get refunded. I had one audit on that account because I was an idiot and failed to report at all for a few quarters. The only thing the auditor was interested in was wanting documentation to support the ITC's.
On the second account used exclusively for eBay I always reported GST collected up until eBay took over that job. Of course in the earlier days I reported very little GST collected because 95%+ of my sales were exports and zero rated which meant that I ALWAYS got refunds as my ITC's exceeded GST collected. Domestic sales picked up substantially in the past 10 years so in many filings I had to remit the difference. When eBay started collecting I went back to always filing for refunds.
There are literally millions of GST accounts that only file for refunds, sometimes because the goods/services they provide are zero-rated, sometimes because there sales are primarily export and sometimes because they have little or no revenues but lots of expenses (start-ups for example). Given that it is so common it is very unlikely on it's own to trigger an audit. Even if it did a simple comment "I sell via a Marketplace (eBay) so I do not directly collect GST" is going to be sufficient, if you have an auditor giving you a hard time then this is when you pull out the Billing Agent Election form and some evidence that your sales are mostly or all on eBay.
Bottom line, when eBay is collecting GST on your behalf you need to report three numbers, your gross revenue, report zero GST collected (unless you collected some outside of eBay) and report the amount of ITC's, next step is to wait for your refund to arrive which usually takes a couple of weeks (faster if you have direct deposit set up).
New registrants with modest projected revenues will usually be set up with annual reporting. If you are always getting refunds you might want to request quarterly reporting so you get your refunds much faster than annual reporting. Depending on how organized you are about expenses and ITC amounts the reporting process is really very simple, I report quartery and can complete the process in less than 15 minutes. If you have to go through a big box of random reciepts it will take longer but as a side effect it's much faster to do your year end tax returns because the info has already been accumulated for the GST filings.
FYI - On the reporting form you CAN seperate your revenue into taxable and zero-rated (export) but that info is just for Stats Canada and is not required by CRA.
regs43
·2 years agoI am registered for GST/HST and 98% of my sales are on ebay. I was auditted this tax season. I prepare my taxes myself, so NOT a tax professional at all lol.
1. You need to fill out the joint election form with ebay (check the Canadian Tax forum on this site) and you will find the form and where to email to have ebay fill out their part. You keep this form in the event you are auditted and then supply it at that time. This just says ebays collecting the tax and not you for these sales.
2. If you sell at a garage sale, FB market place, kiji etc you would collect the tax (this tax you need to remit to the CRA since a digital marketplace is not doing it on your behalf)
3. When you file taxes annually it asks for Gross sales (and then how many are Canadian or 0 exempt (this is to USA international etc).
I SUSPECT this is why I was auditted as I reported Canadian sales as I normally did in the past (ebay plus other selling vanues) becasue I uesed to collect the tax. However I had no tax collected on thoese ebay sales since ebay does it now. She mentioned something about my refund ask was more then 30% of my Canadian Sales and tax I should have collected. The trigger for the audit (my best guess)
If you have good records the audits not that bad after the initial freak out period lol! I submitted what they asked for and 2 weeks later got my refund that I originally asked for. I fully anticipate I will be audited for a few years going forward or until they decide its a waste of time. I am kind of glad I was auditted as I was able to learn a few things and improve on the way I record things going forward so I dont need to backtrack to find info. I will also just prepare my taxes going forward with the info they ask for in an audit and be ready when they come calling.
recped
·2 years ago@regs43
Your post is excellent but I will quibble with statements like "I was audited this tax season. I prepare my taxes myself", referring to GST reporting as "taxes" could be misleading to some because GST reporting has absolutely nothing to do with Income Tax (personal or corporate) that are commonly referred to as "taxes".
In formal accounting methods GST collected is a Balance Sheet item not an Income Statement item, ITC's can appear on an Income Statement but only to reflect a reduction in expenses because of the ITC refund (the refund can either be an actual refund or just a credit against GST collected).
Of course in accounting there are always multiple ways to account and report activity, whatever works for you is fine as long as it is both accurate AND consistent from year to year.
regs43
·2 years agoI said I prepare my taxes myself and not I am not a tax professional to indicate I dont know everything ( a disclaimer).
The Auditor when she called did ask me if I had an accountant and then asked how I filed my personal taxes. So They did ask that information. I also right off the bat said I sell on ebay and ebay collects and remits the tax for my sales and I mentioned I have an election form for them to do so. That didn't stop the process.
She still wanted to see specific information about my Gross Sales and ITC's. There was things I didnt currently include in my records that i had to go back and add in (minor things but that they wanted to see, so it was some backtracking to pull out information to include with all the other stuff I already did). This was the nice learning part, so I can continue to do that going forward.
reallynicestamps
·2 years agoIf you use the same checking account for all your Managed Payments accounts, you may find keeping track of your eBay income simpler.
I have seen a claim that if you are listing less than 300 items that a Store is not necessary.
Although it hurts to actually pay eBay for the other 50 listings, the total cost is less than the $25 monthly subscription for a Basic Store.
Do the arithmetic yourself, my dysnumeracy gets in the way.
ypdc_dennis
·2 years agoAre you registered for GST/HST sales tax collection ? Have you given eBay your tax number(s) ?
If you have not then ebay is not collecting the sales tax on your behalf -- they are collecting the sales tax under marketplace rules.
recped
·2 years ago@3cthrifty
Even if you are registered to collect GST/HST it makes no difference at all, there is no need for you to report any of the tax amount that eBay collects.
1 - On a personal tax return it's completely irrelevant
2 - On a business tax return it's completely irrelevant
3 - If you are registered for GST/HST you do not report the amounts collected by eBay, you still report gross sales and utilize Input Tax Credits for any GST/HST YOU paid on purchases of goods or services such as shipping, eBay fees, goods for resale, a comfy chair to go with your desk etc. Any transactions not via eBay you would collect GST/HST and report as normal.
I'm 99.999% sure that eBay does not report ANY of the details of the transactions they collect GST/HST to the Canada Revenue Agency. Of course if CRA requests detailed information on a taxpayer eBay would hand it over.
Comment for anyone reading:
For any seller on eBay other than the strictly casual, registering for GST even when the $30,000 threshold is not met can be financially beneficial, there is no minimum if nothing else you can get a 13% (ON) refund on your eBay fees. One thing to consider is that yoiu would now have to collect and report taxes on any sales outside of a marketplace like eBay.
3cthrifty
OP2 years agoHere is my current situation.
I have a sole proprietorship and I also just registered for GST/HST as my sales are about to exceed $30k.
If I understand you correctly,
- I do not need to remit GST to the CRA because Ebay already does this?
- Wouldn't this be cause for an audit?
I'm pretty green on this topic so any input is very much appreciated.
flipistics
·2 years agoStandard disclaimer that I'm not a tax professional and you should consider everything said to be wrong and verify it for yourself.
You need to fill out the tax form and submit it to eBay who will countersign it. This is giving eBay permission to handle the taxes for you and provides you proof that they are being collected and remitted. Without this, eBay would still collect and remit the tax, but I believe you would ALSO be responsible for remitting it out of your own pocket.
Once that's done, you don't need to remit GST/HST for eBay sales, but you DO need to collect it and remit it for sales from other sources (like Marketplace, etc). Make sure you read up on how to provide proper receipts if you do. Depending on your location, you could also be over the threshold for collecting provinical taxes on non-eBay sales (or you may potentially need to sign up for provincial tax numbers even though you'd be submitting a null return with everything done on eBay).
Remember to keep track of the taxes you pay for things related to your business. Being able to claim the tax on business expenses actually puts quite a lot of money back in your pocket at the end of the year.
recped
·2 years agoI have two GST accounts, one since the inception of GST in 1991, the second one (operating as a different business) since 2001.
On the old one I have not reported any GST collected in at least 20 years but I always have had a few ITC's to get refunded. I had one audit on that account because I was an idiot and failed to report at all for a few quarters. The only thing the auditor was interested in was wanting documentation to support the ITC's.
On the second account used exclusively for eBay I always reported GST collected up until eBay took over that job. Of course in the earlier days I reported very little GST collected because 95%+ of my sales were exports and zero rated which meant that I ALWAYS got refunds as my ITC's exceeded GST collected. Domestic sales picked up substantially in the past 10 years so in many filings I had to remit the difference. When eBay started collecting I went back to always filing for refunds.
There are literally millions of GST accounts that only file for refunds, sometimes because the goods/services they provide are zero-rated, sometimes because there sales are primarily export and sometimes because they have little or no revenues but lots of expenses (start-ups for example). Given that it is so common it is very unlikely on it's own to trigger an audit. Even if it did a simple comment "I sell via a Marketplace (eBay) so I do not directly collect GST" is going to be sufficient, if you have an auditor giving you a hard time then this is when you pull out the Billing Agent Election form and some evidence that your sales are mostly or all on eBay.
Bottom line, when eBay is collecting GST on your behalf you need to report three numbers, your gross revenue, report zero GST collected (unless you collected some outside of eBay) and report the amount of ITC's, next step is to wait for your refund to arrive which usually takes a couple of weeks (faster if you have direct deposit set up).
New registrants with modest projected revenues will usually be set up with annual reporting. If you are always getting refunds you might want to request quarterly reporting so you get your refunds much faster than annual reporting. Depending on how organized you are about expenses and ITC amounts the reporting process is really very simple, I report quartery and can complete the process in less than 15 minutes. If you have to go through a big box of random reciepts it will take longer but as a side effect it's much faster to do your year end tax returns because the info has already been accumulated for the GST filings.
FYI - On the reporting form you CAN seperate your revenue into taxable and zero-rated (export) but that info is just for Stats Canada and is not required by CRA.