Canadian Sales Taxes - Questions

[velvet@ebay]

Hi everyone –

We know you might have questions regarding the email you recently received about eBay Canada collecting Canada Sales Tax (GST/HST/QST/ PST) on behalf of our sellers. Please feel free to leave your questions and comments here and we’ll get them answered as soon as possible. Keep in mind there could be a delay as we check with internal teams to ensure we’re getting you the right answers to your questions.

Thanks for your patience!

[reallynicestamps]

I just realized that all these posts are in a new Board called Canadian Sales Tax.

[marnotom!]

Probably why there are so many rogue threads in other locations; this particular board is getting overlooked.

[marnotom!]

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@yanleb wrote:

As a small supplier (sales < 30 000$ over 4 consecutives quarters), I don't have to collect sales tax.

eBay, you are going too far.

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You still won't be collecting (and remitting) sales tax under this new system.  eBay will be, however.

[yanleb]

I know, but the result is the same.  My items will be taxed and it will hurt my small business.

[rocketscollectibles]

This is really bad for small sellers like me. No way to put a positive spin on this despite your email. There is no requirement to remit HST for people making under 30k. So my question is what trouble are you saving me exactly?

This.

We don't even have legally to collect taxes as small sellers so why ebay would collect them? Is this even legal

Just seems to me like another tactic from ebay to charge more fees, as i guess obviously we'll have to pay fees on taxes collected like for US sales. Taxes to buyers means fees on taxes and more taxes on fees. We're also gonna lose because buyers will be willing to pay less for our items because of taxes. What's this!? Is this update supposed to have any sense other than ebay trying to charge more fees

[marnotom!]

Other Canadian eBay sellers’ items will be taxed, too, and many other selling platforms will be moving in this direction if they don’t want to get into trouble with the Canada Revenue Agency.

Why don’t you ship outside of Canada?

[busybeas_books]

From what I've seen so far there are 2 types of 'sellers' here in Canada: those registered to collect GST/HST/QST/PST/whatever; and those that are not. For both cases it is the buyer who pays the tax.

For the non-registered seller who previously has not charged a tax, the final selling price (to the buyer) will be higher. Will this lead to loss of sales? Maybe a little. We are used to being taxed on just about everything. However, eBay will (no probably about it) base their fees on the sold item total price, which now will include tax i.e. less $ for sellers.

For those registered to pay the tax with sales over $30k, and those under (myself included),  who registered to get the tax-related benefits (ITCs, home/office/auto expences etc) the big question is how will the ITCs work. Will eBay be telling us how much tax was collected annually/monthly/each sale/at all? 

[bigpsycho00]

Thanks for info will see how it plays out on July 1st

[bar-fan]

I'm of the belief that eBay's collecting the taxes on your behalf will make it an Input Tax Credit.

We just need to know the rates that they are collecting for shipments in and into each province and territory for this to work correctly.

Am I correct, velvet@ebay ?

Kevin

[bar-fan]

velvet@ebay Please make sure that the eBay charged sales tax is based on Shipping Province or territory to receiving province or territory.

Also please make sure that they API gives the correct tax amounts, so that if the seller needs to claim an Input Tax Credit on any of the taxes that they are registered for, it can be done.

It has to be made as easy as possible for sellers to do their accounting. Please get the rules for sellers and how they are to handle this change out there as quickly as possible, because some sellers will have an overlap in their reporting of their sales tax obligations.

I for one do, as July will be part of my 1st quarter remittance of GST/HST, since I'm Ontario based.

Going back to the API, it needs to pass along GST/HST, QST and PST, so that we can properly print any necessary reports in listing software. Also, the same needs to be made to the way the eBay fees are passed along, please have the programmers remove the sales tax from the eBay fees as it is illegal for us to charge any consignor GST/HST on Sales tax.

Thanks,

Kevin

[marnotom!]

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@rocketscollectibles wrote:

We don't even have legally to collect taxes as small sellers so why ebay would collect them? Is this even legal

Just seems to me like another tactic from ebay to charge more fees, as i guess obviously we'll have to pay fees on taxes collected like for US sales. Taxes to buyers means fees on taxes and more taxes on fees. We're also gonna lose because buyers will be willing to pay less for our items because of taxes. What's this!? Is this update supposed to have any sense other than ebay trying to charge more fees

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@rocketscollectibles, I appreciate that you see yourself as a new-ish seller struggling to get a foothold on eBay, but part of being successful on eBay is keeping tabs on what else is going on out there.  eBay US has collected taxes on sales from most of its US buyers for about three years now and this practice is also in place for other eBay sites.  Amazon has been collecting taxes on Canadian sales for almost a year now.  It's not a fee grab inititated by eBay.  This is eBay complying with Canada Revenue Agency dictates.

[snowbankcreek]

The seller in ( in my case ) is obligated to collect the PST only on sales in my province and account for it and file it quarterly. I am not obligated to collect GST. I'm not giving ebay the option of siging into my online tax accoutn and doing my quartery taxes. I f ebay collects GST on behalf of my sales then am I obligated to return it or claim it as part of my income... how does that work? Or does eBay just keep the GST and commission for themselves?

[snowbankcreek]

Can you explain how those of us who are registered with a PST number (not required to collect the GST/HST) and only have to charge PST on sales not the shipping cost within our own province. We have to collect it and file with the receiver general or ministry of finance and remit it. How do we go about collecting and paying it from ebay without giving our efile tax sign in information to have this done?

[ricarmic]

@bar-fan 

This is how I understand things, but I am not an accountant....

ITCs are for GST/HST we pay on our "inputs/costs of selling*" and they're taken off what we owe from the GST/HST we collect from buyers.

Under these new rules,  eBAy is collecting the GST/HST from the buyer, so we won't see the GST/HST money anymore like we did before (probably will for the nanosecond like happens with the US IST (internet sales tax)).

So any GST/HST we pay on our inputs is still an ITC taken off whatever we brought in. If all of one's sales are ebay sales, after July 1 then NO GST/HST is collected and we'd get all of our ITCs as a refund.

I'm expecting this is going to cause conniptions with the CRA because the number of folks getting big or total refunds for their ITCs is going to skyrocket.

I got enquired against this year by the CRA because they noticed a big gap between my sales and GST/HST collected, that gap is going to be a LOT bigger next year!

*so the GST/HST that eBay charges us on our selling fees etc is also an ITC

[jwstewart.shaw]

Alot of people including yourself seem to think this is correct, but it's not.  eBay is not the seller, they are the listing agent. 

If they were the seller, they would set the price, provide a warranty, etc.  Basically all the things that I as the seller do.

They plan to collect and remit tax on my behalf, when no tax is due.  That is according to the CRA which I got a ruling from.

Hey, it's simple.  Let eBay answer my question, and provide a document from CRA showing sellers like myself are required to remit the taxes eBay claims we are.

It is, frankly, rather chinsey of eBay to depend on their customers (you) to answer questions from their other customers (me, etc) about their corporate policies.

[marnotom!]

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@jwstewart.shaw wrote:

A lot of people including yourself seem to think this is correct, but it's not.  eBay is not the seller, they are the listing agent. 

If they were the seller, they would set the price, provide a warranty, etc.  Basically all the things that I as the seller do.

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They aren't a listing agent, either.  They're a marketplace facilitator.  They allow sellers a spot to sell their merchandise and process payments from buyers for the seller, charging them a fee or fees for this, depending on the services the seller selects from the MF.

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@jwstewart.shaw wrote:

They plan to collect and remit tax on my behalf, when no tax is due.  That is according to the CRA which I got a ruling from.

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"On your behalf" probably isn't the best way to describe the process unless the seller is registered to collect and remit tax(es), but it is what it is.  The US eBay went through all this about three years ago.  Many sellers felt they shouldn't be indirectly charging their buyers from other states "internet tax" but it turns out that sales made through marketplace facilitators are a completely different ball of wax.  I don't know if Canadian tax legislation has caught up to the unique nature of marketplace facilitators when it comes to commerce or if it needs to, but Amazon Canada has already been handling sales made through its marketplace in this manner for nearly a year now, so make of that what you will.

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@jwstewart.shaw wrote:

Hey, it's simple.  Let eBay answer my question, and provide a document from CRA showing sellers like myself are required to remit the taxes eBay claims we are.

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As a seller without GST/HST registration, you'd be remitting nada, zilch, squat under this system just as before so I doubt this document would exist.

[bar-fan]

I know what is it. I'm just asking about how we have to report our sales to the CRA. I don't sell exclusively on eBay. I don't use Amazon, which already collects it for their sellers. I do have some in person sales. My question is important because I need to know how to enter my eBay sales.

[bar-fan]

I read the information in the CRA link and it states that online marketplaces have to collect the taxes on behalf of their Canadian sellers. This is why eBay is moving to collect them, starting on July 1. Amazon already does this.

[ricarmic]

Hi @bar-fan I am also in the same boat, I sell on several online platforms and the old "snail mail" way too.

Keeping in mind I'm no expert on this either, as I understand it at this moment we would report it the same way we would international non GST/HST collectible sales (I think they're called zero rated).

So in the past if we had for ease of math $10,000 canadian ebay sales and $10,000 USA buyer ebay sales, our total sales from a CRA perspective is $20,000. but we'd only collected/reported GST/HST on the $10K Canadian worth, the other 10K is zero rated. (This is why I got my every 5 years or so follow up question from the CRA regarding why I had way less GST/HST than my sales would suggest)

After July as I understand it, ALL ebay sales would look the same as US/International now, ie everything we sell on ebay is all non collected by us. So for my total above all $20,000 would be non collected, ie we didn't collect any GST/HST. Of course any outside ebay sales that we did end up with the $$$ in our account we'd have to report like we do today. 

We'll have to see how the ebay reporting works in terms of letting us be able to identify how much of the sales were ebay collectible vs not, or if it even matters to us aside from being able to give something to the CRA to show them someone is collecting the taxes for the stuff we sell on eBay. Perhaps the eventual "billing agent authorization forms" will help explain more. Time will tell.

For folks that are very ebay centric they could find themselves collecting NO HST/GST and they'd be getting up to 100% refunds of their ITCs. The CRA would certainly notice that!

[flipistics]

If I remember right, the 2021 taxes had a question asking what percentage of your sales were from online marketplaces. Now the question makes a little more sense in light of changes such as these.

My biggest questions are

1) What happens with ITCs and how we claim/report them? The taxes have to be attributed to people registered to collect them somehow.

2) What if we're registered to collect taxes in some provinces but not in others (as well as the fact that eBay doesn't let you input multiple tax numbers per country right now)?

3) Will eBay correctly charge taxes on items where only the GST portion is required (like books!), because it's a mess right now.

4) Will eBay correctly display the seller's tax numbers on receipts to the buyers?