Taxes on shipping?

[xena_monroe_bonjovi]

I get that eBay is now collecting taxes on items sold on eBay. However, why are they charging it on the shipping cost as well? Canada Post prices already include taxes when you calculate them on their website. So why am I being charged twice on that service??

[xena_monroe_bonjovi]

devon@ebay

[marnotom!]

When you purchase an item from a retailer, that retailer may have paid tax on it too.  If they’re registered to collect and remit GST/HST, they may end up getting a credit for that tax from the CRA somewhere down the line. Same deal with shipping.

eBay charges tax on shipping because the CRA said eBay has to do this. You may want to take this up with the CRA.

[flipistics]

eBay charges taxes on the full transaction. That tax is paid by the buyer. The tax on shipping is a different separate transaction, and is for a service purchased by you, the seller.

If you register for a tax number, then you can get refunded for the tax you pay for the shipping service (and most other business related activities).

[pjcdn2005]

You are not being charged twice.  The buyer  pays tax on the total paid for the item, shipping and and handling.  Then the Seller pays tax when they purchase the postage.     It works that way whether the shipping is 'free' and part of the item price or whether shipping and handling is listed separately.   Sellers who were registered for  gst and who charged tax before eBay started colllecting tax also collected tax on the full amount.

It works the same way when you purchase on any large retail site.

[femmefan1946]

EBay is not charging taxes on the item nor on the shipping.

EBay is charging taxes on their service for processing your buyer's payment.

[marnotom!]

Hey, all.  As the OP posted this on the Buyer Central board, I assumed they were posting from a buyer's perspective.  Did I miss something?

[lady.stark]

..

[xena_monroe_bonjovi]

You did not miss something marnotom! I am the *buyer*

Item price : $49.99

Shipping: $26.99

GST/HST (5%): $3.85

PST/QST (9.975%): $7.68

I don't understand why I am being charged another tax on the tax. The % should be on the item price only. Not shipping since any carrier (wether Canada Post, FedEx or UPS) already charge tax for the shipping service. This is double dipping in my book!

[flipistics]

It may or may not be double dipping. The bottom line is that the government mandates it this way. This is not simply an eBay thing. The only difference between eBay and a store like, I don't know, Staples that ships items out is that the seller here may not be tax registered which allows them to recoup the shipping tax. Staples also has to pay tax when they ship an item out, they just get it back later. Consider the following various scenarios as to why it's difficult to deal with this:

1) Seller is registered to collect tax. This means that the seller actually gets the tax THEY pay to ship the item out returned to them as a tax credit (to prevent this very issue). In this scenario there is no double dipping. The tax on the item and the shipping is eventually only paid once, by the buyer, as expected. If eBay didn't collect the tax here from the buyer, no net tax would be end up being collected by the government for the shipping portion of the sale.

2) Seller offers free shipping, flat rate shipping, or discounted shipping. Unless the seller uses eBay labels, which most probably do not, eBay has no clue how much the seller ACTUALLY pays for the shipping so have no way of knowing what percentage of the sale to tax. This would have abuse written all over it, and there's no way the government would let that fly. Either that, or the paperwork to prove shipping costs to eBay on every transaction would overwhelm everything.

Now the really fun part is that sellers are charged fees by eBay on the full transaction, including the tax, and then have to pay tax on those fees as well 🙂

[petriomelony]

Here's the issue with some sample math (Ontario buyer's perspective):

Situation: $25 item, $20 shipping (before tax)

Canada Post quotes $20 + 13% = $22.60 for shipping, including taxes.

Ebay puts both things together, $25 (item pre tax) + $22.60 (shipping post tax) = $47.60

Then Ebay charges tax on top of that, $47.60 + 13% = $53.79

The "tax" calculated by Ebay is $53.79 - $47.60 = $6.19

The taxes which should be paid for the item is $25 * 0.13 = $3.25

The taxes which should be paid for the shipping is $20 * 0.13 = $2.60 (presumably recouped by the seller via credits)

The total amount of taxes which should by paid by the buyer is $45 * 0.13 = $5.85

The total amount of taxes actually paid by the buyer is $53.79 - $45 = $8.79

The extra is the double tax, $8.79 - $5.85 = $2.94, which is the tax applied by ebay on the already taxed shipping cost ($22.60 * 0.13 = $2.94).  (Where is this money going?)

The fix is for ebay to use the pre-tax shipping cost in the calculation (shipping + fuel surcharge via Canada Post).

Even if there wasn't a clear double tax situation, the accounting is still off since the tax on the shipping should be $2.60 and the Ebay calculation is $2.94, which means the buyer is paying more tax than necessary (precisely 0.13*0.13 = 1.69% more than they should, but in the current double tax case 1.13*0.13 = 14.69% more than they should).

[reallynicestamps]

already charge tax for the shipping service.

Look at your words.

The GST is a Goods and SERVICES tax.

Processing your customer's payment is a service.

The GST is charged on SERVICES.

[reallynicestamps]

EBay assesses, collects, and remits taxes on purchases, including shipping, to the appropriate government agencies.

Buyers pay those taxes.

EBay also charges fees for that service (processing payments).

Sellers pay those fees.

EBay assesses, collects, and remits taxes on those fees.

Those taxes are paid by the seller.

Governments charge taxes.

Businesses charge fees.

[pjcdn2005]

It's actually fairly common for a company to charge tax on the shipping charge. For example, I just ordered something from Uline and they charged  tax on the item and on the shipping charge.  

As a customer, when you and I pay for shipping & handling on a order, we are not paying for actual postage. We are paying for the service that the seller is providing. They are packing up the order and buying a label and that is what is being taxed by ebay. There is no double taxation.

Keep in mind too that some sellers use a flat rate, not calculated.  That means if a seller charge $20 for shipping that's what you would see before you checked out in Ontario and that is what I would see in Alberta.  Then the tax is applied and we would pay our respective rates.