Is eBay causing shipping to be triple taxed within Canada?

[pcdorney1]

Hi,

I just recently sold something on eBay (to someone else in Ontario) and before that it was years since I sold anything so a lot has changed.  But I noticed something strange.  eBay collected taxes on the tax on the shipping then charged eBay fees on both the shipping and collected taxes then taxed the eBay fee.

For example:

In Ontario the tax rate on most things is 13%.

When it costs $10 to ship something I'm charged an extra $1.30 in taxes at the post office for a total shipping cost of $11.30.  So on eBay the seller will need to pay me $11.30 for shipping.

So far the government has collected $1.30 tax on the $10 or 13%.

Then when eBay collects the money from the buyer they charge the buyer 13% tax on the total collected including shipping and the taxes on shipping.  I never see this money.  It passes from buyer to eBay who (I hope) is passing it on to the government.  So at this stage eBay will send the government:  ($10+$1.30)x13%=$1.47.

So now for the initial $10, $2.77 or 27.7% has been collected in taxes.

Then eBay charges an eBay fee on top of the total amount including the shipping, tax on "shipping" and tax on "shipping and tax on shipping".  For the item I sold it was 13.25% though I guess it can vary depending on the category of the item.  In this example the ebay fee on the shipping and related taxes would be:  ($10+$1.30+$1.47)x13.25%=$1.69.

I'm not sure if eBay is supposed to be charging a fee for collecting taxes?

Then eBay charges me 13% on the ebay fee (so a tax on the fee on the shipping, tax on "shipping" and tax on "shipping and tax on shipping").  In this example the tax on the part of the ebay fee related to shipping and related taxes would be: $1.69x13%=$0.22.

So total tax paid on the initial $10 for shipping is $2.99 or 29.9%.

Does this seem strange to anyone else?

[marnotom!]

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@logisticsgirl514 wrote:

Hello..not only that, ebay is charging GST and provincial tax for goods coming in from the US to CANADA.. that is wrong!!!@ privincial tax should only be charged if an item is bought within province. 

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Somebody pointed that out a year or two ago, and my recollection of when they searched for information on this on canada.ca is that they discovered that if the item is handled by a Canadian shipping company at any point during its transit, the entire shipping charge becomes taxable.

This is certainly true of items that are forwarded through the “eBay International Shipping” system.

[ilikehockeyjerseys]

Despite this being an old thread, because this might be relevant to more people than the OP I will add in that if you are operating a business that sells on eBay or other online platforms, it might be advisable to register for GST even if you would still qualify as a small supplier. 

You would be able to claim any taxes charged on eBay fees as an input tax credit. Along with any other taxes spent on supplies or goods to resell. Because all online playforms now collect tax by default, there is no competitive advantage to not registering. The only compelling reason not to register would be if you do in person sales as a significant portion of your business and do not want to have to increase the cost because you would have to collect tax on those.

(I'm not an accountant, the above shouldn't be taken as professional accounting advice. Consult a professional, which I am not.)

[femmefan1946]

Governments collect taxes.

Businesses charge fees.

EBay charges its fees on your customer's ENTIRE payment, no matter how that is made up.

This is a fee on payment processing and has been Standard Practice in the processing industry since Diners Club emerged in the early 1950's, seventy years ago.

The fee is charged on  the selling price + shippping cost+ sales taxes.

All the payment that eBay handles.

You get the selling price (less all fees).

The shipper gets the shipping cost (less your handling fee if any)*

The appropriate governments get the sales taxes.

But all that money flows through eBay and they provide the service of sending it to the appropriate party.

* and less any profit you may make by for example charging a Flat Rate of $10 for shipping that actually costs you $8.00 or the counter rate rather than eBay's discounted shipping that you pay.