eBay Canada Sales Tax Collection – An Update on Problems and Questions Since the July 1 Change

On July 1, eBay Canada started collecting federal and provincial (GST/HST/QST/ PST) sales taxes on applicable sales to Canadian-based buyers to comply with new guidelines announced in Canada’s 2021 Federal Budget and recent provincial sales tax amendments.

This new requirement means that eBay has been collecting sales taxes since the first of July on applicable tangible products, new or used, and digitally downloaded goods.

The law makes no distinction between pre-owned or new products, and just like with refurbished items sold in retail stores, sales tax is collected on sales involving pre-owned or refurbished products.

There is no change for sellers that were not previously required to collect and remit sales tax as eBay will take care of the entire administrative and collection process.

The burden to comply with these new regulations is on eBay with eBay sales.

However, sellers that previously collected and remitted sales tax, for them this is a mid-year change and may require some adjustments to their accounting and reporting.

eBay had sent out a notice to GST/HST and QST registered sellers informing them they had to complete the Billing Agent Authorization Tax form before July 1. Canadian sellers that have not completed this step should do so now.

eBay Canada Transition to New Tax Collection System Problems & Questions

Unfortunately, this transition has led to a couple of problems eBay has so far acknowledged.

• Sellers who were required to send in the Billing Agent Authorization Tax form have received zero communication from eBay. The company said it’s checking all forms to ensure they were properly filled out and would notify sellers when this process is complete.
• eBay also admitted that it messed up and charged buyers sales tax in the Bullions category, which is a tax-exempt category. The company said it will refund affected buyers and the administrative responsibility to fix this issue is on them.

In addition, it appears eBay Canada received a lot of questions from sellers about if they would report seller sales data to the government. The company confirmed in a statement that eBay will NOT share sales data with “any provincial and federal jurisdictions.”

Furthermore, eBay clarified to Canadian sellers that “detailed seller reporting information will be provided monthly indicating the eBay collected tax. This will indicate the Federal and Provincial taxes collected from buyers on your sales and will include the tax that will be remitted by eBay directly to the appropriate taxing authorities.”

Digital Downloads Also Affect Non-Canadian Sellers

One other wrinkle eBay discussed in a recent note to Canadian sellers is that although the new regulations primarily affect Canadian-based sellers, eBay will also be required to collect sales tax on digitally downloaded products from non-Canadian sellers.

This does represent a minor change for non-Canadian sellers. But since they are not registered with any Canadian provincial or federal government, eBay is taking care of the tax collection. However, it could come up from buyers in messages questioning the additional charge.

eBay Canada has published a new landing page “Understand tax obligations that may affect you in Canada” that sellers can look for additional answers on this new regulation and how it affects them.

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