Ebay collects sales tax on my behalf - how do I report this to CRA?

[techbuytreasures]

I am a small seller. Ebay collects sales tax on my  behalf. I did under 30k in gross sales. Don't want/need to register for GST/HST for this year. 

I have the understanding that If I had $20,000 in Total sales (Includes taxes), and ebay collected $2,000 in taxes on my behalf, I would report my gross income as $18,000, then deduct expenses, ebay fees, shipping, etc. 

How does the CRA then know that eBay remitted the taxes on my behalf and paid them for me? Do I then have to pay sales taxes e.g. GST/HST on the balance? Am I overthinking this? 

Is there a box on the T2125 to put sales tax that was already paid by eBay? 

[marnotom!]

eBay charges GST/HST on top of the item's selling price and remits it after the buyer has paid it, so your gross income in your example would still be $20 000.

If you were registered to collect GST/HST as of today, you would need to fill out a GST506 form.  eBay does provide one that's prefilled with some of its information, but I'd be leery of using it without changing the start date on it since as you were selling between that date and now without being GST/HST registered, it could cause problems when referencing your earlier sales.

Information on this can be found in section 5 of the eBay Canada User Agreement as well as on this page.

Keep in mind that this is layperson's advice.  I'm not a tax accountant or anything resembling an accountant, for that matter.

[femmefan1946]

No.

Still not a tax accountant, but your gross sales and your gross payments would be the same $20,000.

The taxes eBay collected would be a deduction, the fees eBay was paid would be a deduction, the postage you gave to Canada Post or UPS would be a deduction, the bubble wrap and paper you packaged with would be a deduction.

But your income would still be $20,000.

Your TAXABLE income would be lowered by all those deductions.

If you look on your Seller Hub-> Payments-> Tax Invoices you could print out and attach those monthly statements to your income tax forms.

[motomike_canada]

On your HST/GST form you would:

report gross sales of $20,000

report tax collected on sales of $0

report any ITCs paid 

keep reports from eBay, if audited it will prove that tax was collected and remitted for those sales.

eBay reports to CRA both your taxID and tax collected/remitted so has been a non-issue as far as I'm concerned. 

*not an accountant

[ilikehockeyjerseys]

If this is the only platform you sell on, and you plan to continue to sell on eBay for a long time, maybe pay an accountant a one time fee to set everything up for you properly so that all you have to do each year is input the new information. 

With that said, if eBay is the only platform you sell on you should consider registering for GST. You're losing money by not doing it. eBay already charges the GST, and by registering you can claim any GST or HST you spend as an input tax credit and get it back at the end of the tax year. The only reason not to register would be if you sell on other platforms and don't want to have to raise your price by charging taxes yourself. 

[ypdc_dennis]

If you are not registered for GST/HST then ebay is not collecting sales tax on your behalf.

Any sales tax ebay collected from the buyers is done under marketplace rules. You do not count that sales tax when figuring out your income. Any sales tax collected by eBay is eBay's responsibility.

So in your example of $18000 sales/shipping + $2000 tax -- your income would be $18000.  The $2000 in tax that ebay collected from buyers is for eBay to account for under marketplace rules. You can ignore that tax amount.

The sales tax rules are different when you are registered for GST/HST and you are having eBay collect  and pay on your behalf.

-;-