Ebay Collecting Sales Tax on Sales from Unregistered Sellers

[thrustanparry]

My annual sales volume doesn't qualify me for a registration number.

Will I now be able to claim all sales/business expenses on my personal income tax filing?  Is CRA going to give me a number anyway?

[pikamatty1]

If you sell on a regular basis you should have already been doing this.   The cra views all your sales as gross income.    Ebay is saying  they are now collecting and remitting sales tax, which sellers should have always been doing themselves.     Sellers who file hst returns still need to know the totals, as they are credits  (itc's) against tax paid on inventory/operating costs etc....  In your case you don't file...... which was your loss actually.   You can continue to not file , since ebay will be doing what you should have been doing  (why the gov is making them now).      They way you operate, any taxes you pay on your goods, your office, transport - anything related to your business......you have been LOSING.....when it should have been an HST refund to you annually. 

[thrustanparry]

Hi,

I do not sell regularly.  I asked about getting a registration years ago and was told I didn't qualify with sales of under $35,000 annually - for the reason that I would be elligible to write off expenses against it. The sale of personal property is not subject to sales tax to my knowledge.   If I collected tax I would not be allowed to submit it without registration.

I agree to your point on the HST as a flow through tax.  I paid HST on my fridge.  I can't get that back as I am the end user.  If I sell that fridge on eBay and they collect tax that means I'm not the end user and should be able to claim a credit.  Yes?

If personal property is no longer exempt from sales tax then everything I own should generate an HST credit when I die as it will deemed to have been sold upon death.

[pikamatty1]

The 'personal property' **bleep** has been used for years online as an excuse to cheat, and the gov is no longer having it.   That is basically what this legislation is saying.     If you are in the habit of selling your personal property you are a:   Sole Proprietor,    and probably, selling at a loss.    Everything a sole prop owns is in their name (not a corporation) .     The gov does not and will not distinguish between me selling my old shoes and me selling new  shoes I purchased to resell( at least feeling that way at the time of purchase).  So if you kept your receipts you could have  claimed a business loss on form 2125   and an hst refund on the tax, therefore reducing your net income overall and getting a refund.     I sell into the USA primarily, so 98% of my hst  expense is refunded to me each year .......that is hst on EVERTHING I can possibly relate to my business use. 

And the advice/interpretation about the hst threshold was wrong.    That limit is not a limit....its a suggestion that once said you   do not have to file   under whatever $.     That would be in gov's favor in fact to say this ,since they keep all your hst you paid the vendor.      Fact is you can file business returns for any amount positive or negative.    If you expensed $1000 in a year and paid $130 in hst and your sale was to the USA for example , you are owed $130.    Believe me, my hst return is the first thing I do in Jan.

Your fridge was $1500 and hst was $195.   You sold it to an Alberta resident where there is no hst , only gst.    You (ebay) collect 5%, $75.    You are owed $195 - $75.    

[pikamatty1]

I looked at your history , and you are a small business like it or not.    Your sales show a pattern - like hobby or craft/antique shops.     If you are getting stuff for free, then you are making large profits and that would be interesting to cra.    If you are sourcing it and paying you are losing out by not running it as a business.   They will find you on ebay sooner or later.....ebay will be 100% transparent to the gov very soon.

[motomike_canada]

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@thrustanparry wrote:

Hi,

I do not sell regularly.  I asked about getting a registration years ago and was told I didn't qualify with sales of under $35,000 annually - for the reason that I would be elligible to write off expenses against it.

---

Please go to the CRA site and have a poke around:  While you are Required to register for GST/HST if you sell over 30,000 Gross anually, you have been able to voluntarily register for GST/HST even if you are under the threshold. 

[thrustanparry]

Thanks,  I will try that.

[thrustanparry]

What people forget is that eBay was originally a place to buy stuff at auction, not just retail. I get that Retail has rules.  They also get write offs.

I am 70 years old.  I have collections of books , model trains, antiques and the like.  I'm not able to take any of this with me.  Many of my friends are in the same boat.  My point is that if my back issues of Architectural  Digest are now taxable then I want my refund.  Another poster has said I can voluntarily register for GST/HST so I will look into that.  I was told NO before.

Two questions:

Will the HST be added to 'Shipping/Handling' charges.  I'm charged tax on shipping labels.

Is eBay going to charge buyers the proper tax on book purchases and other items that are PST exempt in certain provinces.

[thrustanparry]

I just looked at my own history.  I have been a member for 21 years.

I have received 147 Seller Feedback responses and 1,189 Buyer feedback responses.

I think that is a clear representation of my eBay activity as an occasional seller of personal property.

[reallynicestamps]

You always could claim your "business" expenses when working out your income from selling online.

But that means you have been declaring your selling income too.

You pay tax on your profit  not on your sales.

YOU are not collecting sales tax. EBay is collecting sales tax

For you, this is an expense because, just as they have been for a couple of years, EBay (and Paypal before them) charges you FVF on your customer's ENTIRE payment, which now includes Canadian sales taxes.

On a $100 sale/Free *Shipping  to BC, your customer pays $113dollars and eBay charges you 12.9% FVF on the whole amount or $14.57**.

Which is $1.67 more than it was last month, before the Revenue Canada ruling.

And that added $1.67 is a deductible when working out how much profit you have to declare as income.

*Free Shipping to keep the numbers simple. Free Shipping actually means you have included your shipping costs in your asking price.

** Which you deduct from your customer's payment before declaring the payment as income.

[reallynicestamps]

Auction is retail.

[reallynicestamps]

If you sell those collected zines, the usual rule of thumb is that since you bought them for your own pleasure and read them, their value is now zero. You used up their value by reading them.

If you then sell them for $100 plus $100 shipping, your buyer in Alberta (no PST) pays $210 for them.

You don't see the $10 GST at all, but it passes through your hands.

• Which is what happened when you bought the zines originally. The newstand did not "see" the tax, they only collected and remitted it.

You paid fees to eBay for processing the sale and the customer's $210 payment.

At 14.55% for the category, you paid eBay $30.55 for FVF.

You also paid out $100 for shipping. That is an expense.

So we are back to the $100 for the magazines.

You declare $69.45 as income from the sale  of used personal property.

[pikamatty1]

Yes,  sales taxes apply to the item price + whatever you charged for shipping.     The ebay tax chart calculator has been in place for many years and is doing just this.

I really don't know if ebay will tax buyer's correctly based on exempt items or by provincial variations.    Ebay's track record on these things is to get it up and going &  then tweak it later.     I have noticed since implementing Managed Payments they clearly have a solid accounting department in Canada overhauling the , like you said,  the  past  'Flea Market'  very loose business practices. 

[reallynicestamps]

I think that is a clear representation of my eBay activity as an occasional seller of personal property

No one is disagreeing about that.

But eBay will still be collecting sales taxes on those (future) sales.

And you will be paying eBay FVF on the total payment including on the tax.

Just get a notebook and record

• how much your customer paid you,
• how much you paid for shipping,
• how much you paid for packaging, 
• how much eBay took from the customer's payment for sales taxes,
• and how much you paid eBay in Final Value Fees for processing the payment.

Five numbers.

Receipts will help if you think you might get audited, but for the most part, Revenue Canada doesn't worry about small discrepancies.

[pikamatty1]

  So  you're saying you are getting rid of all your old 'stuff'  before you kick it?      But you have been a member for 21yrs?    Did you only start selling recently?

If the sales are really just your hording & hobbies over  the last 30yrs you are probably better off not starting a business at this point.    You will only increase your income unnecessarily  The CRA is pretty clear about personal-use propery costing under $1000  and selling under  $1000..  This nets zero and does not have to be reported. 

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-re...

[thrustanparry]

Thanks all.  It sounds like I would be better off collecting the tax by being voluntarily registered instead of having eBay collecting it.  If they collect it I can't recover any of my costs. 

Are registered sellers collecting and remitting the tax on their own or is eBay doing it as a paper transaction?

[pikamatty1]

But if you are just selling old personal stuff you have no purchase invoices, correct?

If you start a business selling this stuff  your cost per item will be zero and your gross profits will be 100% of the net  proceeds of the sale.     Even if you expense all the related business costs, you will increase your taxable income for no reason.  The CRA doesnt require you to report personal-use sales. 

To answer your 2nd question, how ebay collects and remits the sales taxes  is forthcoming in another email.   But I will assume that ebay will take care of this for registered sellers by linking to your HST number.

"A separate communication for GST/HST and QST-registered sellers will be forthcoming."

[thrustanparry]

I have sold about 150 items in 21 years.  All personal items. Some things from my Father's passing on behalf of my Mother (she's now 98 and living at home).

All the collectors I know will replace items with better ones or change direction which leaves them with surplus items.  I worked for a stamp & coin franchise at the Robert Simpson Co. while going to school in Toronto.

 What I meant about auction versus retail is that  with a fixed price you can control your markups and costs and work toward a profit.  With an auction, you get what you get.  The auctioneer in this case is eBay, not the seller, and they never lose!

[pikamatty1 · Accepted solution]

In a nut-shell, the news today about ebay collecting /remitting sales tax does not affect you.    You don't need to do anything. 

And registering a business number to record your sales would be   a mistake   if its only personal-use items from your collection.    Your sales will all be 100% profit and  this will impact your income tax unnecessarily. 

So really, just keep doing what you're doing.

[tryubik-useonlyasdirected]

As a registered seller, I'm a bit confused as to how ITC's will work.

If eBay is collecting and remitting, then at tax time the gov. will already have all the tax collected. Therefore, the seller will owe the government only HST/QST/PST for Canadian sales made outside eBay. However they are still entitled to ITC's.

IE: So, for ease lets say a seller makes no sales outside of eBay and sells $20,000 in Ontario through eBay to which eBay has now collected and remitted the 13% HST, $2,600. The same seller purchased $2,000 of supplies worth a $260 ITC credit. Given that eBay has already collected and remitted $2,600 then the seller has to apply to the government somehow for a $260 ITC Refund?

Where on the Return for Registrants 1216 forms (and accompanying Working Copy) are these amounts supposed to be input and deducted that they calculate the accurate amount of Refund?