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Canadian sellers registered with GST/HST are required to remit the amount of tax collectable based on the province of the buyer for Canadian buyers. No tax needs to be remitted for sales outside Canada.
For years I have sold on the basis that buyers do not pay GST/HST. It is included in my price, if applicable.
Typically, the weighted average GST/HST payable within Canada works out to about 10% (from 5% to 17%).
In my own experience, selling worldwide, sales from Canadian sellers to Canadian buyers average 20% of all sales.
So for every $1000 in sales, on average, $200 would be within Canada on which I would remit approximately $20 in GST/HST (of course the exact calculations would be done when reporting the tax).
I would simply absorb the tax (2% of sales) as any other marketing or sales expense.
"Hence tax included can raise prices drastically if it happens to be an expensive item?"
It depends how a seller calculates the tax.
As explained above, the tax only worked out to 2% of my selling price on average, selling on eBay for 19 years. It was included in my "cost of doing business".
Sellers overseas obviously have other considerations.
"If you say tax is included should price not be reduced if you are not required to remit it?"
Not necessarily. Many eBay sellers - worldwide - are NOT registered to remit taxes.
The tax is included in their cost because they paid tax at time of purchase but they have no way to recover the tax even if they export the goods.
In Europe, where they have VAT, prices always include VAT. It does not matter if the eBay seller is or is not register to remit.
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