Calculating Sales Tax on shipping

[greg_dunning1]

I am a small seller who should not and does does charge sales tax on items.  But when I ship to a buyer I have to pay the sales tax on the shipment. I am charging actual cost shipping.  The shipping calculator calculates the gross shipping amount correctly based on weight and dimensions I have entered but the calculator does not include the sales tax.  When a buyer pays upon winning the auction and pays the amount to me, I do not receive the tax that I I later have to pay when I ship the item.

In the sales tax table, can I charge sales tax on shipping but exclude the items for sale from the tax?

Is there a box I am not checking off in my preferences?

[reallynicestamps · Accepted solution]

This comes under "handling" charges.

You are paying the sales tax (and fuel surcharge) on postage purchased for delivery within Canada.

What percentage of your sales are within Canada?

If you are buying through Paypal you are also getting a 5% to17% discount from PO counter prices on certain services.

Are you allowing for those discounts (on ALL your postage purchases, not just those that attract taxation)?

Postage and handling costs are tax deductible if you become successful enough to pay taxes.

Income from online selling should be noted in your personal income taxes if you are not filing as a business .

In the sales tax table, can I charge sales tax on shipping but exclude the items for sale from the tax?

You can't charge for sales tax unless you are remitting those taxes directly to the appropriate level of government. Indirect charges like sales taxes on postage (or GST on purchases for resale) are not among those.

If you are registered to remit sales taxes, there are tax credits available to offset the taxes you pay.

Consult a tax accountant who is familiar with small businesses and with online selling.

Free advice is worth every penny you pay for it.