Revenue Canada just acquired the authority to peruse all premier eBay Canada sellers’ accounts to determine if they have summarily paid taxes on all their sales.
This pisses me off. If I’ve bought something with my “after income tax” salary, and I’ve bought it from someone who also bought it with their “after income tax” salary this is crap. When it was originally bought the sales price included all sales taxes. Now, when I buy it second-hand, from someone who already paid the original taxes, I need to pay additional taxes? The same holds true for automobiles here, taxes on used goods where the taxes have already been paid…
What’s it like elsewhere for taxation on used goods?
Dunno how things are in Canada, but in at least some states here, the sales tax is intended to cover any transaction in which money changes hands in exchange for any item of value.
Its not good news but I cant say that I am really surprised. The GST is pretty agnostic as opposed to the old manufactures sales tax , in that the GST is applied to all levels of sales from the manufacturer to the middleman to retail and then to you.
To be honest , the GST has a threshold of 30 k I believe, but will graciously stand corrected before you have to start filing and remitting the tax. So if your making above a certain amount of money on Ebay you should be expecting this and treating it as a small business. Otherwise your declared revenue on your t-4 slip is going to be at odds with your lifestyle — car, home, vacations to florida that sort of thing.
I doubt revcan is going after mom and pop outfits selling sweaters and baby wear, folks like that are more likely to get a letter explaining the requirements of the tax regime.
i do not know either the philosphy or the law in Canada, but as kaylasdad99 points out, the approach in the U.S. is to tax transactions. There is not explicit Value Addd Tax, but a person who purchases a used car is expected (in those states that have sales taxes) to pay a tax on the transaction.
In the U.S., with the intention of avoiding a steeply ramped VAT, there are specific categories of sales in which one party is identified as an Original Equipment Manufacturer or a re-seller. Sales involving such parties are pretty universally exempted from sales or use tax in the U.S. on the grounds that if Dell had to pay a sales tax when if bought chips from Intel who had to pay a tax when it purchased solder from some vendor, the final customer would be paying tax on multiple transactions. However, once that customer takes home the computer, plays with it for a year or so, and decides to trade up, selling the original 'puter in his wake, that original 'puter is now taxed as a separate transaction, (providing the seller reports it, of course).
In the US, sales tax is a State function right now.
As noted, it’s usually based on transaction and not whether or not something is “used” in part because the concept of “used” becomes pretty tricky to define.
One consequence of having sales tax reside at the State level is that two States may be at odds over whether to report a transaction. I am supposed to pay tax in Illinois on goods I buy out of state, but if the seller is not reporting them, am I likely to remind Illinois myself? (Don’t answer that…) The selling state is happy to have a functioning business in their state, so they aren’t pushing their businesses to report me. If that business doesn’t have a retail presence in Illinois (which then mandates sales tax collection), the transaction um…tends to go unreported.
I am waiting for the whole Internet-based untaxed goods bubble to bust but in the meantime it saves me 7% on nearly everything I buy. I mean…it would save me that if I didn’t report my out of state purchases.