UPDATE: eBay has released an update to Canadian tax collection policy to address questions and concerns - including the illegal collection of tax on bullion.
We know that the Bullions category should be exempted from being taxed and we apologize for this technical error for those of you who were taxed. eBay will refund the buyer any tax over-collected and will be responsible for any tax under-collected. eBay is utilizing third party software and taxability rules to ensure the proper tax treatment of all items listed on the site.
Many marketplaces began collecting tax on Canadian transactions as of July 1st, with mixed reports across the board about how the new requirements are being implemented.
For example, some Etsy sellers report having to add tax into item prices, resulting in higher prices and higher fees.
And now, eBay sellers in Canada are claiming the platform is illegally collecting tax on bullion and precious metals.
Disclaimer: I'm a US seller and not an expert tax laws and regulations, especially those of other countries. As always, I highly recommend all sellers to consult qualified professionals and relevant authorities on these matters.
That being said, here's what sellers are saying in the eBay Canada community:
Starting July 1, 2022. eBay Canada started illegally charging taxes on precious metals of purity 999 (Platinum, Gold, Silver) on the buyers side.
This is illegal, per the Canadian law there should be no taxes on precious metals of 999 purity. I think lawyers should take legal action against eBay Canada.
Just sold Bullion, buyer was taxed. This is illegal.
Taking notes, formal notice to be served - chat transscripts with eBay, audio correspondence with Tax prepresentatives from Revenu Canada confirming tax excemption of precious metals, so on and so forth. I would suggest sellers do the same.
This affects both sellers and buyers, buyers are paying an illegal tax which in turn will deter the customer from purchasing metals on eBay, leaving us sellers in the dark, unsure whether or not eBay will correct this illegal issue.
Today July 3rd I just sold a one ounce silver bullion Canada Maple which is 99.99 % pure and eBay charged the buyer both GST and PST on it. EBay then charged my fee based on the grossed up taxed amount. They then charged me GST on that fee! This made a very significant difference in my net profit. Lawfully there should have been NO tax on this item.
Sellers report being told by eBay support the tax collection is valid because it is being assessed on the transaction, not on the item.
Laws & regulations can be found easily Canada.ca and Mint.ca. Bullion is just one of many tax exempt coins, metals & currency so it would be arbitrary to assume sellers selling in the wrong category is of concern.
For example a commemorative coin be tax exempt so as long as the coin is refined to a minimum of .995 purity. However coins with embellishments may be taxed. A canadian consumer should not pay tax on pure metals such as gold & silver in the form of coins, coin sets, bullion, rounds, bars, etc..
Again to reiterate, this affects sellers, it's a strong deterent encouraging consumers to buy their metals elsewhere. And most important of all it's illegal taxation. Please forward to your "sales tax team".
eBay’s position is that it’s the transaction that is being charged taxes, not the item. Ergo, bullion is not being charged taxes illegally. The transaction might be taxed inappropriately, however. It’s not clear yet if the transaction tax is supposed to jive with a goods tax.
eBay community staff responded to concerns in one thread by confirming eBay is using third-party software for tax configuration on all items sold to purchasers in Canada – including exempt items, but will process refunds of tax that is overcharged.
We've been advised of the following:
Beginning July 1, 2022, eBay will be responsible for the configuration and taxation of all items sold to purchasers in Canada – including exempt items.
If an error is made, eBay will refund the buyer any tax over-collected and will be responsible for any tax under-collected. eBay is utilizing third party software and taxability rules to ensure the proper tax treatment of all items listed on the site.
If anyone comes across a seller listing items like buillion in the wrong category, then we'd encourage you to report the listing.
Velvet did not mention whether or not sellers will be automatically getting fee credits on those over-collected tax refunds now that final value fees and ad fees include tax in the calculation.
If you're a Canadian eBay seller, I'd love to hear your take on this - should eBay be collecting Canadian tax on bullion and precious metals? Let us know in the comments below!