To Charge Tax Up Front or To Absorb....That Is The Question

Question for you guys, with the HST soon to take effect, and some CP rates going up within Canada as a result, I have had several different personal conversations with different eBayers as to what they regard as the "best plan" regarding tax collecting. We all know that we have to collect and remit the correct taxes, and I am wondering if you guys plan to change your tax collecting procedure, or stay the same.

I am considering absorbing the taxes, (ie, not charging them up front, but removing them as required later so the customer doesn't need to deal with it- although I may have to "up" the prices slightly to help absorb this). What is your opinion on this? I think there are alot of eBay buyers out there that still do not understand the fact that we (as in my business and every other seller on eBay), are actual businesses that are required by law to collect and remit tax.
And many still believe that eBay still has the "garage sale" feel, and don't think they should have to pay tax. I wonder how many potential buyers walk when they read that we collect tax. On a ten dollar item, they probably don't care so much, but on the more expensive items, I think they do.

Whaddaya think?

Cheers,
AXE
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To Charge Tax Up Front or To Absorb....That Is The Question

Now Bernie, that's my kind of party....lol.....

And getting back to the tax topic at hand (although my mind is a wee bit distracted now, ha ha ha )...

Do I have this list correct? On July 1st, a seller in Ontario for example will need to update and charge the following taxes per Province:

BC- 12% HST
AB- 5% GST
SK- 5% GST
MB- 5% GST
ON- 13% HST
QC- 5% GST
NL- 13% HST
NS- 15% HST
NB- 13% HST
PE- 5% GST
NT- 5% GST
NU- 5% GST
YT- 5% GST

Any corrections, or does that look right to you guys?
Thanks,
AXE
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To Charge Tax Up Front or To Absorb....That Is The Question

Those percentages are correct for taxable transactions when shipped from ON or any HST province or AB.

GST provinces (PE, QC, MB. SK) and territories may have to add their own PST for shipments within their province or territory if applicable.
Message 42 of 58
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To Charge Tax Up Front or To Absorb....That Is The Question

Manitoba has a PST equal to 7 %.

Books are exempt....

Many items sold for $100 or less, per item sold, are exempt...

Must register for PST if one earns more than $10,000 as annual sales.

If I do buy a non-exempt item, or buy an item for over $100 I show my tax number and do not have to pay the tax.

Tax is applied if a buyer is from Manitoba.
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To Charge Tax Up Front or To Absorb....That Is The Question

bilge21
Community Member
I'm a bit confused here. As some of you may see from my listings, ALL my sales are to Canadians only, so I have been charging PST and GST for shipments to Ontario addresses and just the 5% GST to the rest of Canada. This is based on what I have read and seen from many Canadian sellers on eBay. In my listings I mention the taxes so the buyers are not confused.

Now, as of July 1st, it appears I will have to start charging the 5% GST only to all non-HST provinces and each province's HST on shipments going to the province that are HST. Sounds like it's going to be a hassle to update all the current listings to reflect that and may cost sales due to buyers from previously HST-exempt provinces now having to pay their provincial HST on thier purchases from me. Makes for a lot of time-consuming changes for 100+ current listings to change the wording of my ads as well as the tax tables.

Due to that I was thinking of raising my prices a couple bucks and just mentioning that I will absorb ALL taxes, but they still get an invoice detailing the taxes in case they are a business buying supplies so they can claim thier ITCs on purchases from me. just an idea I am bouncing around.

The biggest point is that I KNOW my sales will drop off since the majority of my buyers are out of Ontario and if I start charging thier own province's HST, they may go to another competitor that sticks to the old ways.

What do you guys advise in this regard?
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To Charge Tax Up Front or To Absorb....That Is The Question

"and just the 5% GST to the rest of Canada."

That is the first problem. As you are registered with GST/HST, you currently (and for the last many years) must remit 13% HST on your sales to NS, NL and NB.

"they may go to another competitor that sticks to the old ways. "

????

If a seller is GST/HST registered, there is no such option. GST or HST is payable on taxable sales based on the province of the buyer. It has been that way from the beginning and the new rules will not change that.

"if I start charging thier own province's HST...."

The only change outside of ON is BC where 12%HST takes effect next week, and NS where HST is increased from 13% to 15%.

"Due to that I was thinking of raising my prices a couple bucks and just mentioning that I will absorb ALL taxes"

That may make sense and several GST/HST registered sellers are going that way. The problem of course is that your selling prices appear high when compared to others who add the tax at the end of the transaction and you end up paying higher FVF to eBay.

"ALL my sales are to Canadians only,"

Here is a free tip to increase your sales to Canadians: include "ship to USA" in your listings with a relatively high shipping cost. Your listings will then be seen on eBay.com where the majority of Canadians shop!
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To Charge Tax Up Front or To Absorb....That Is The Question

PS - For years I have been purchasing Brother Remanufactured Toner Brother TN-360 on eBay from a Mississauga seller. I never saw your listings because I generally shop on eBay.com since I list on .com and my MS-Explorer window is on eBay.com (except for a window for Canadian discussion boards).
Message 46 of 58
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To Charge Tax Up Front or To Absorb....That Is The Question

jakeeangel
Community Member
I'm a bit confused here. As some of you may see from my listings, ALL my sales are to Canadians only, so I have been charging PST and GST for shipments to Ontario addresses and just the 5% GST to the rest of Canada. This is based on what I have read and seen from many Canadian sellers on eBay. In my listings I mention the taxes so the buyers are not confused.




Shouldn't you be basing it on what you're supposed to do as outlined by the Federal and Provincial gov'ts and not what other eBayers do. You are registered to collect both taxes right?
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To Charge Tax Up Front or To Absorb....That Is The Question

bilge21
Community Member
Yes, I am registered and have been remitting my taxes. Guess I will have to give them a few bucks more.

The reason I set the tax rates the way they are is because I've been told yes or no, nobody seems to be able to give me a clear answer, so I checked other Canadian sellers and noticed they were all doing the same thing, collecting HST from thier home province and just 5% GST from all other provinces.

There is a question regarding Quebec's QST/HST though. Those that say you must collect ALL HST sometimes say Quebec taxes are different and you don't collect them. Who is right?

Thanks Pierre, that is a good tip opening up to the US market at a high shipping cost. I will implement that when I make the changes on the 30th.
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To Charge Tax Up Front or To Absorb....That Is The Question

"I've been told yes or no, nobody seems to be able to give me a clear answer"

Here is a very clear answer, the same one I have given on these board for ten years, and the same one you will get from Revenue Canada or your accountant (if he is competent and experienced in mail order):

As a GST/HSR registered seller, you MUST remit GST or HST based on the rate applicable in the province of your buyers for taxable transactions.

Today, and for the last many years, that means 13% for sales to NB, NS and NL and 5% for the rest of Canada.

As of July 1st, 2010, it becomes 13% for ON, NL, NB, 15% for NS, 12% for BC and 5% for the rest of Canada.

I cannot make it any clearer than that. Once again, the responsibility is to REMIT the tax. It is the choice of each seller whether to charge it or absorb it.

You should have received that information in writing from the federal hgovernment quite some time ago.

"There is a question regarding Quebec's QST/HST though"

As an Ontario based seller, there is NO question about QC: you only remit 5% GST.
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To Charge Tax Up Front or To Absorb....That Is The Question

bilge21
Community Member
"

"There is a question regarding Quebec's QST/HST though"

As an Ontario based seller, there is NO question about QC: you only remit 5% GST.


Thanks for the clarification Pierre.

I'm glad that Quebec only gets charged 5%, since about 50% of my buyers are in Quebec and if I had to start charging thier QST, I might lose some of them.

Checking thru my invoices, I've had very few sales to the Maritimes, so it won't be that much of a hit on my bank account to remit those taxes.

Due to the extensive changes I must make to my listings in the body to reflect the new tax rules, and shipping (to implement your idea of shipping to the US for better exposure on .com), I think that whatever listings I have up that do not expire by the evening of the 30th, I will just remove them all and relist the new changes from Turbolister. It's a lot easier to make changes to 15-20 listings in TB than it is to change 100. The time saved vs the cost of new listing fees would be worth it to me.
Message 50 of 58
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To Charge Tax Up Front or To Absorb....That Is The Question

" the cost of new listing fees "

???

95 listings at $0.05 each is less than $5.00, no big deal.
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To Charge Tax Up Front or To Absorb....That Is The Question

bilge21
Community Member
" the cost of new listing fees "

???

95 listings at $0.05 each is less than $5.00, no big deal.


Actually it's 0.20 cents per since I am using the basic store, not premium.
Message 52 of 58
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To Charge Tax Up Front or To Absorb....That Is The Question

Here is a free tip to increase your sales to Canadians: include "ship to USA" in your listings with a relatively high shipping cost.

Used in the opposite direction, this plan is the subject of many complaints from Canadian bidders who are faced with apparently extortionate shipping from US sellers who say they ship internationally, but are really after the placement.

But as long as you do ship to the buyers who pay, you are probably "eBay legal".
Message 53 of 58
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To Charge Tax Up Front or To Absorb....That Is The Question

bilge21
Community Member
Well, took almost an entire day to redo all the listings in TurboLister as I decided to redesign all the ads a bit anyway, opening myself up to the U.S.A. market for better exposure, but without the exoribant shipping rates like the US sellers seem to like to charge us Canadians to ship up here.

At least I am all done and ready to upload on July 1st.

As an aside, has anyone noticed an increase in sales to BC residents? Looks like they are stocking up before the HST takes effect there.

A note for Pierre...

Pierre, I don't know if anyone has said this, but Ebay is extremely lucky to have a very knowledgeable seller like you willing to take the time and effort to help out on these forums without compensation. Your knowledge and experience have helped out many buyers and sellers that I have seen, including myself. You sir, are a great role model for sellers everywhere.

For that, you have my thanks and appreciation. 🙂
Message 54 of 58
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To Charge Tax Up Front or To Absorb....That Is The Question

As a GST/HSR registered seller, you MUST remit GST or HST based on the rate applicable in the province of your buyers for taxable transactions.

Pierre,

I did not know that. I have not been collecting but have been remitting BC taxes. 7% PST if the buyer was located in BC and 5% GST for buyers located anywhere in Canada. Guess I should have been remitting HST for NB-NS-NL?

Bernie
Message 55 of 58
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To Charge Tax Up Front or To Absorb....That Is The Question

"Guess I should have been remitting HST for NB-NS-NL? "

Yes. I am surprised your accountant did not advise you accordingly.

If you had been audited, the auditor would have added a few dollars to your bill (plus interest, etc...). 😞
Message 56 of 58
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To Charge Tax Up Front or To Absorb....That Is The Question

Don't use an accountant. In our little town, they are quite useless, unfortunately.

In my automobile export business their advice conflicted with CRA's standpoint and I got a tax bill for almost 1/4 mill. Had to hire a tax lawyer to get out of the liability.

I believe that there are a total of 2 (volume) eBay sellers in this town and I seriously doubt if any accountant here even knows what you just mentioned.

I recall only selling 2 or 3x to HST provinces last year, no biggee.

2% CAD sales amount to $5,000 year or about $600 HST to absorb. Do I want all the customer and accounting hassles over $50/month?

Bernie
Message 57 of 58
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To Charge Tax Up Front or To Absorb....That Is The Question

I'm seeing a small bump in sales on my more expensive stuff to BC the last couple of days....probably due to the increase in tax that is coming in a few hours that they will have to pay.

Anyone else seeing a sales increase to BC?

AXE
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