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.

-;-

[jamesp7143]

Not an accountant but it was my understanding that if income is under the threshold then gst need not be collected by a small business or individual (a small competitive advantage for some). Along comes ebay and starts collecting gst on your ebay sales regardless. IMO the CRA ought to have insisted that ebay only collect gst on behalf of users who have a gst number registered with the CRA. That's what they would have done if they cared about low-income Canadians who are trying to be self-sufficient. Use your SIN for ebay instead of gst unless you are already registered. Once registered you have to collect and remit even if you are under the income treshold for charging gst.  ...my opinion, I'm not an accountant.

[recped]

eBay didn't do that  because they don't care they did it because the CRA REQUIRED them to do it.

There is no income threshold for charging GST, you MUST register if revenue exceeds $30,000 but you CAN register at any revenue level even if it's negative revenue.

For any seller on eBay, especially for anyone that is selling exclusively through Marketplaces like eBay or etsy it is beneficial to register. It would only take a few minutes once per year to file a return, your buyers pay tax regardless but you would get a nice refund from CRA for every penny of GST/HST you paid on the following:

GST/HST you paid on goods you buy for resale

GST/HST you paid on eBay fees

GST/HST you paid on Shipping

GST/HST you paid on shipping supplies

GST/HST you paid on ANYTHING related to your business activity

[john_koenig99]

---

@recped wrote

For any seller on eBay, especially for anyone that is selling exclusively through Marketplaces like eBay or etsy it is beneficial to register. It would only take a few minutes once per year to file a return, your buyers pay tax regardless but you would get a nice refund from CRA for every penny of GST/HST you paid on the following:

GST/HST you paid on goods you buy for resale

GST/HST you paid on eBay fees

GST/HST you paid on Shipping

GST/HST you paid on shipping supplies

GST/HST you paid on ANYTHING related to your business activity

---

This is very helpful, thank you!

I will definietely be looking into doing this. 

[jamesp7143]

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/2-2/small-suppliers...

Has anyone contacted CRA to inquire about this? Small supplier does not have to charge and remit GST/HST unless I am misunderstanding this guide. I would rather pass the savings on to customers. I could give better prices and still charge 15% to cover the GST I paid in making my supplies. Isn't that the point of having such a thing as a "Small supplier" in the first place?

So the question then would be how to continue selling as a small supplier with no GST/HST charges. Is the CRA going to force a small supplier to register for and start charging/remitting GST/HST on all sales even outside ebay? That's going to cause more book keeping work and more importantly raise prices across the board for small suppliers... essentially stripping away the benefit of being a small supplier. Is there a form or certificate or some exemption papers CRA gives to ebay? What is happening to all the GST/HST monies ebay is sending to CRA on behalf of small suppliers who do not have a GST account? It will just sit there collecting interest for CRA.

I'm pretty sure you are not allowed to collect GST/HST unless you are registered for GST/HST and then you must on all sales even if you remain a small supplier with revenue below the threshold.

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/2-2/small-suppliers...

"Supply by small supplier not a registrant
s 166

12. If the consideration (or part of the consideration) for a taxable supply made by a person becomes due, or is paid before it becomes due, at a time when the person is a small supplier who is not registered for GST/HST nor required to be registered for GST/HST, that consideration (or part of it) is not to be included in calculating the tax payable in respect of the supply. In other words, tax is not to be collected by the supplier on the consideration."

[jamesp7143]

Hey John, See my updated post 05-20-2025 01:22 AM. Do some quick math on input credits vs lower prices and factor in your tax on overhead costs into your pricing. For me with low overhead I am far better off being able to set lower prices.  I'm going to contact CRA... this doesn't seem right.

[flipistics]

@jamesp7143  Marketplaces like eBay are mandated by the government to collect and remit the tax. It doesn't matter whether you are a business or even an individual.

[chicweb]

Exactly. What I understand is, ebay uses their own tax number. Collect, remit. Doesn't matter if the person has a tax number or not.

If a business/individual has a tax number (30k+), they need to fill the form to permit ebay to continue using their tax numbers on our sales.

Basically, that's it, I think.

It's still ebay that uses their own tax numbers everywhere.

Might be wrong, but that's what I think is happening here.

Taxes always goes from customers to ebay directly, never in sellers hands.

[jamesp7143]

@flipisticsYes, ebay technically buys an item from the ebay seller then resells it to the buyer and since they have revenue over 30k must collect and remit GST/HST to CRA. I spoke to CRA this morning at the gst/hst rulings dpartment 800-959-8287 and they clarified this as documented here:

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4022/general-info...

See "Agents" under "Selling goods, services, and rights for others" in the TOC.

Ebay lumps this gst/hst together and remits to CRA without any sort of reference to any individual at all.

So when ebay says they do this on "your behalf" that language doesn't really fit with small suppliers (IMO) unless said small supplier decides to register for gst/hst. Small suppliers who are NOT registered for a gst/hst account at CRA need to do absolutely nothing. (of course as mentioned already in other replies to claim ITC you first must register for a gst/hst account and go down that road)

[reallynicestamps]

Small supplier does not have to charge and remit GST/HST unless I am misunderstanding this guide.

You are misunderstanding.

You -the small seller- do not charge and remit tax.

EBay -the giant corporation- charges and remits tax.

This is a service for the small seller who doesn't have to work out the correct taxes for over 200 different tax entities in North America alone.

And eBay charges the seller a service fee for doing so.

The service fee is a tax deduction.