Why am I being charged for selling my used items?

[maghamir]

Hi there,

I really need help with this. I am a regular eBay user and I am selling all my personal used music CDs on eBay. I do not own a business and do not have a GST number. I have already paid tax on all these items when I bough them (starting in 90s). I have contacted eBay and they are no help and just telling me to go and consult a tax expert! 

Can someone clear this for me please? Maybe I am wrong but as far as I know if you are selling your personal used items you should not be charged a tax unless eBay is charging me tax for using their service as a market place.

Thanks in advance. 

[femmefan1946 · Accepted solution]

There are sales taxes on used goods.

At a garage sale, this is ignored because the tiny amount that might be due is less than collection costs.

At a thrift store you will pay GST/PST/HST on your purchases.

If you buy a used car, you will see a substantial tax charged.

EBay is not taxing you.

You are paying a private company a fee (35c* fixed and non-refundable + 10% of selling price and shipping fee) for advertising your goods worldwide to an audience of some 140 million active buyers.

You are not required to charge and more importantly remit taxes on your sales until you sell a substantial amount (~$30,000) annually.

On some US sales you will see sales taxes noted on your Paypal invoice. These taxes are paid by the buyer, not you, and are remitted by eBay to the buyer's state government.

While you should keep careful records of your sales, and more importantly your selling costs, generally selling personal goods is not considered income, and you do not pay income taxes on those sales.

If you are buying for resale, your income from online selling does have to be reported, but only the profits.

And that's where the tax accountant comes in.

*This fee is waived in some promotions. At the moment eBay allows sellers to list up to 200 items without the 35c fee. The selling fee is still charged.

[pjcdn2005]

Ebay is charging you tax on the final value fees that you pay for each sale, not on the items that you are selling. 

[maghamir]

Thanks for this excellent explanation, I wish eBay customer service was able to provide me with this instead of asking me to go and talk to a tax consultant!

[a51split]

IMO, you would be a fool to rely on ebay for tax advice. There's a high chance of them getting it wrong since they aren't the primary source of the info.

Clarifying what was stated above. If your total revenue of sales is less than $30,000/yr, you are legally not required to collect GST.  PST or HST is another matter.

[ypdc_dennis]

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@a51split wrote:
... If your total revenue of sales is less than $30,000/yr, you are legally not required to collect GST.  PST or HST is another matter.

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HST has the same $30000 collection requirement as GST

[femmefan1946]

you are legally not required to collect GST.

That would be more correctly stated at "not legally required".

I spent most of my working life as a writer and editor, often with colleagues whose first language was not English. (And they corrected my French, of course.)

The original statement implies you must not collect taxes if you take in under a certain amount.

This is not true.

You can legally collect sales taxes if your annual income from selling much less than the $30K usually quoted.

As long as you are registered to collect and remit the taxes, go ahead.

Many businesses are still remitting taxes when they are grossing almost nothing. Perhaps they have an eye on the future and growth, perhaps they know that the revenue has a beady eye on their business.

My re-statement implies that the seller has the choice of registering while the business is grossing under the magic $30K.

Don't get me started on "jibe" and "jive".

[venturefour]

I think this tax on used items for people who are selling used items from their home - items they already they paid tax on is ludicrous -  I think ebay is getting greedy and taking such a big piece of the pie it's not worth it to sell or buy here. In the past, I'd buy used to  get a deal - with these new laws in place I might as well buy new and have new.  There's absolutely no reason why anyone would pay tax on the same used item over and over again.  It is ridiculous! Obviously, eBay thinks we are silly, stupid sheep.  I'm done just doesn't make sense to buy/sell here any more.

[marnotom!]

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@venturefour wrote:

I think this tax on used items for people who are selling used items from their home - items they already they paid tax on is ludicrous -  I think ebay is getting greedy and taking such a big piece of the pie it's not worth it to sell or buy here. In the past, I'd buy used to  get a deal - with these new laws in place I might as well buy new and have new.  There's absolutely no reason why anyone would pay tax on the same used item over and over again.  It is ridiculous! Obviously, eBay thinks we are silly, stupid sheep.  I'm done just doesn't make sense to buy/sell here any more.

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Well, if you think that greedy eBay is raking in all these taxes and keeping the monies, I guess it wouldn't make sense.

[darak10]

so that people are clear about Canadian tax law, its 30,000 / yr OR 4 consecutive quarters (1 calendar year) until you have to start collecting and remitting sales tax, whichever comes first, NOT until you reach the 30,000/yr threshold.  CRA stipulates the "Or" as if they didnt, no one would ever report over 30,000 / yr and Canadian business would never remit a cent in GST.  

This is moot in a couple weeks for sellers on here but anyways.  

For people who are nervous about July 1 and plan to underreport or not report or try to get around it, you are cutting off your nose to spite your face, effectively harming yourself.  By incorporating or going sole prop route, you are able to use virtually everything you spend for your (assumption) home based business as a write off at tax time, including the amount of GST owed.  Thanks to flying above board on this, this year I was able to use specific business related expenses to cut the amount of GST I needed to remit from sales by over 50%.  

[benjsan-4343]

I would never use ebay again ..the fees are astronomical. I sold an item for 230, it costs me $16 to ship so I charged that . I got net $208, my buyer paid $259 .... so after I pay for shipping I get $193 so I paid $37 in fees for a buy it now item. That is absolutely extreme. The buyer paid an additional $29 for my item and I recieved $37 less after shipping. This is an absolute rip off

[fh991586]

Zombie thread

[marnotom!]

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@benjsan-4343 wrote:

I would never use ebay again ..the fees are astronomical. I sold an item for 230, it costs me $16 to ship so I charged that . I got net $208, my buyer paid $259 .... so after I pay for shipping I get $193 so I paid $37 in fees for a buy it now item. That is absolutely extreme. The buyer paid an additional $29 for my item and I recieved $37 less after shipping. This is an absolute rip off

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@benjsan-4343,  if I were selling that $230 item on eBay for someone for a fee, I wouldn’t consider $37 to be enough payment for all the time and labour involved in listing, maintaining, shipping off the item, and communicating with prospective buyers as well as the final buyer. I guess I’m a greedy seller ripping off my client.

[reallynicestamps]

ZOMBIE THREAD FROM 2020

The problem with zombie threads is that the information may be out of date and misleading.

In this case, Canada is now charging "internet sales tax" (actually the same provincial and federal sales taxes that retailers are required to remit) to any marketplace selling enough, which includes eBay Amazon etsy, etc.

Sellers are charged eBay fees on their buyer's entire payment including those taxes.

[kh-phdan]

Hello Everyone,

Due to the age of the thread, it has been closed to further replies. Please feel free to start a new thread if you wish to continue discussing this topic.

Thanks for your understanding!