Some interesting info re. taxes

[canada_goose_whisperer]

Posting as a new topic purely for visibility, hoping other sellers benefit from this.

Come July 1st, we (sellers) will no longer have to pay taxes on our selling fees (fvf's and $0.30 transaction fee). If you are charged taxes on your selling fees after July 1st, you can get a full refund of those taxes from the CRA using form GST189. This info comes straight from the rulings department.

Hopefully, this helps some people... not sure how many already knew about this.

Cheers.

[ricarmic]

Hi! Just clarifying that this pertains to folks who are not registered to collect GST/HST today because for those registered, we "get them back" as ITCs anyway.

[canada_goose_whisperer]

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@ricarmic wrote:

Hi! Just clarifying that this pertains to folks who are not registered to collect GST/HST today because for those registered, we "get them back" as ITCs anyway.

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Very good point @ricarmic . For registered folks it doesn't really matter because you get them back anyways, but for unregistered folks (e.g. myself) it has a bit more of an impact.

[kawartha-ephemera]

What "rulings department" led you to this conclusion?

One could reasonably conclude that Managed Payments is providing GST exempt financial services but ebay disagrees apparently.

Has there been a recent TCC ruling regarding marketplaces and payment processing?

I seriously doubt that the legacy portion of FVF on products and shipping can be considered financial services.

[recped]

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@canada_goose_whisperer wrote:

Posting as a new topic purely for visibility, hoping other sellers benefit from this.

Come July 1st, we (sellers) will no longer have to pay taxes on our selling fees (fvf's and $0.30 transaction fee). If you are charged taxes on your selling fees after July 1st, you can get a full refund of those taxes from the CRA using form GST189. This info comes straight from the rulings department.

Hopefully, this helps some people... not sure how many already knew about this.

Cheers.

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Do you have a copy of the ruling or link to the D-Memo that you can post?

I've looked at the form you referenced but I don't see anything specific to the "platform" collection of GST/HST on fees.

[mrdutch1001]

we all want that in writing, please , in triplicate...

[reallynicestamps]

Since charging  fees on payment processing of payments to merchants  is a Standard Practice in the financial industry , and has been for decades, either this is not a change (because those fees are deductible from our profits) or we would need further confirmation.

[recped]

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@reallynicestamps wrote:

Since charging  fees on payment processing of payments to merchants  is a Standard Practice in the financial industry , and has been for decades, either this is not a change (because those fees are deductible from our profits) or we would need further confirmation.

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Actually payment processing (stand alone like PayPal) IS a financial service and is zero-rated for GST/HST (PayPal do not charge GST and never have).

Now that eBay is charging both fees for services (non-financial) and payment processing in a combined fee the entire amount is no longer exempt.

[canada_goose_whisperer]

@kawartha-ephemera @recped @mrdutch1001 @reallynicestamps 

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/digital-ec...

The CRA rulings department for digital economies. They don't provide written rulings, only over the phone. Ask them yourself if you don't believe me. Literally talked to them on the phone this morning.

[mrdutch1001]

What is said over the phone cannot be verified unless recorded...you have that recorded , right?

[canada_goose_whisperer]

@mrdutch1001 

I am not in the habit of secretly recording government employees on the phone.

I have given everyone the important info, and the means to verify it officially by contacting the CRA rulings department should they wish. What people do with this information and whether they believe it or not - all due respect - is not a pressing concern for me. I have done my part to inform everyone, and I now have other things to move on and deal with.

[reallynicestamps]

I'm not sure which thread was about charging tax to residents of Reserves but..

Upon the launch of this sales tax implementation, eBay won’t be able to support and accept exemptions for buyers who qualify for the First Nations or resale exemptions. First Nations buyers can apply for a rebate to the CRA on exempt purchases. For provincial exemptions, buyers can go to the respective tax authority for a refund.

From today's email from eBay.

[kawartha-ephemera]

I'm sure MP would have sought legal advice on how to handle their fees and GST. I agree that lumping together their various fees surely complicates GST interpretations, that's the sort of issue that can lead to a Tax Court case which I'm sure ebay wants to avoid so they apply tax to the whole despite there being a financial services component. That's my 2 cents.

[kawartha-ephemera]

On important CRA matters we and they are guided by results of relevant decisions handed down by The Tax Court of Canada. If a particular subject matter has not been pursued in court setting precedent then we're left with referencing relevant CRA Interpretation Bulletins for guidance. If neither precedence or bulletin is available then we're free to form our own opinions and proceed according to our own interpretations .... the likelyhood of CRA push back generally increases in those situations.

[byto253]

It makes sense since hst is being collected from people with under $30k in sales, there should be a mechanism for unregistered to claim back hat paid on eBay.

[ypdc_dennis]

AZ switched on sales tax for all Canadian sellers last year (July 1, 2021).

As a comparison, this is how does AZ approaches the same issue:

If not registered for GST/HST amazon does not charge sales tax on selling fees (1).

If registered, AZ charges GST/HST on selling fees (since those are ITCs).

ebay should be taking the same approach to keep things simple for sellers.

...

Side note 1: I expect AZ does some behind the scenes fancy accounting. Sales tax on transaction minus what would have been charged on selling fees equals amount paid to the government. In other words, an automatic ITC adjustment for non-registered sellers.

Side note 2: AZ selling fees are separate from their FBA service fees (which are always taxed).

Side note 3: ITC is short for Input Tax Credit

-;-

[ypdc_dennis]

If you use GST189 to file for a rebate, the following also applies:

"persons who make an application for a rebate, have to keep adequate books and records, including original invoices, for six years from the end of the year to which they relate..."

From: RC4033 Guide for GST/HST Rebates

[marnotom!]

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@byto253 wrote:

It makes sense since hst is being collected from people with under $30k in sales, there should be a mechanism for unregistered to claim back hat paid on eBay.

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Under this new arrangement, eBay is collecting and remitting sales taxes on the behalf of sellers, not from the sellers

Or are you referring to the HST on seller fees?