#would the government be suspicious for me getting all this not-taxable money

[ncanspeak]

I'd just like the thrill of saving and watching the money go up, it'll only take a year for a small house too! And as the tags I reblgged this from said, I couldn't ever be broke if I got robbed, I'd just wait a day.

Explain your reasoning plzzz

[cindylouwho-2]

Etsy Charging GST & HST on Canadian Sellers’ Fees - Possibly Incorrectly

UPDATED: September 6, 2022

As posted May 31, Etsy intended to start charging GST and HST on some Canadian seller fees, to comply with the government of Canada’s new(ish) tax rules for digital economy businesses. Despite these rules being released back in April 2021, Etsy was inexplicably unable to comply with them by the final deadline of July 1, 2022; an Etsy Support person told me on July 15 that they were still working on the coding. (They also messed up the GST and HST they were supposed to charge on sales as of July 1; more on that here.) 

Suddenly on August 30th, some Canadian sellers reported that Etsy had started retroactively charging the GST and HST on sales going back to July 31, with one-line-per-charge entries in seller payment accounts, in some cases draining the accounts entirely and even forcing them into the negative. A few days later, the above announcement appeared on our payment account pages, although some of us still haven’t had any tax charged. We don’t know if Etsy received an extra month’s exemption from the July 1 deadline, or if they are paying the July taxes out of Etsy profit. 

This raises 2 key questions:

Is it legal for them to back-charge GST and HST on seller fees? 

Why are they charging GST/HST-registered sellers tax, when other platforms are not, and the federal government’s info states these taxes should apply to non-registered sellers only.

Several people are investigating point 1, but we do not have a clear answer yet. You can contact Canada Revenue Agency’s (CRA) digital economy business phone line or email address here to ask them about this. 

Point 2 seems pretty clear: despite what Etsy thinks, they aren’t supposed to be charging GST and HST on the fees of tax-registered sellers. 

Why Tax-Registered Shops Shouldn’t Be Taxed on Etsy Seller Fees

Some of us became suspicious of Etsy’s plan to tax all Canadian seller fees, since Amazon only charges GST and HST on order-related fees of sellers who do not provide a GST registration number. (Marketplace Tax Collection is Amazon’s method of allowing individual businesses to charge the correct taxes on their sales; fees from those sales are not taxed by Amazon.) My website builder, Squarespace, does the same with subscriptions. Were these other companies wrong and Etsy right, even though Etsy needed more than an extra year to code the site?

While tickets have been submitted, I am not yet aware of the CRA telling anyone Etsy should not be charging these taxes on the fees of GST-registered sellers. However, the government website seems quite clear. When defining what gets taxed, the CRA says:

“You have to charge and collect tax on specified supplies that are generally taxable supplies of intangible personal property or services that you make to specified Canadian recipients.”

“Specified Canadian recipients” are defined as:

“...a recipient of a supply in respect of which the following conditions are met:

the recipient has not provided to the supplier, or to a distribution platform operator in respect of the supply, evidence satisfactory to the Minister that the recipient is registered under the normal registration regime; and

the usual place of residence of the recipient is situated in Canada.” [my emphasis]

I’m unable to find any exceptions that would make seller fees related to sales on the site taxable federally for GST registrants. 

So there you have it: once again, Etsy has completely botched their tax obligations, and sellers are the ones who suffer. Given the pace with which Etsy usually moves on these things, it may take months to get this mistake reversed, meaning some sellers will be paying up to 15% more on their seller fees, knowing that they will have to wait a long time to get this money back. 

Why doesn’t Etsy simply hire an expert when these new tax obligations arise? It’s clear, after multiple mess-up like this one, including with the charging of VAT on fees and the incorrect charging of BC PST on orders coming from outside of Canada, that they do not have any staff competent to deal with these issues. 

I still have not been charged GST on my seller fees, but promise to update this post when I file my complaints with Etsy and the CRA. Please let me know if you have anything to add! 

Looking for my article on Etsy forcing tax-registered sellers to add the GST into their prices? Click here to read that piece.