Okay strap on your seatbelt and keep your eyes on the road. I guess we can say that the Honeymoon is over! But here's the thing about taxes and doing business. If you claim all your expenses, there is only a fraction of what you sell to be taxed. Maybe this will be better in the long run. I have tried to make CRA understand that Ebay isn't calculating the Fees properly. Ebay is profiting from the Taxes that the Buyer is paying. Even worse, the taxation is being encapsulated and that means you and the customer are paying taxes on taxes.
This gets Heavy but you need to understand how this Business and the Efforts you make, pan out!
Look at the breakdown in the details of a typical Ebay transaction! Here's an example:
A Snoop Dog CD is sold for $15 and shipping is $10. Sales Taxes are at 13% in Ontario.
So the Grand Total of the sale is $28.25
Now Ebay is charging the Fees based on the $28.25 amount
The Fees are currently around 15% (final value fee in music category) plus another 40 cents (order fee)
The total Fees would be $4.64 which is $4.24 plus the 40 cents
But wait, you have to pay both GST and PST on the Fees too! $4.64 x 13% = 60 cents
so now the cost is $5.24 ($4.64 + 60 cents)
* So you actually only made $9.76 on the sale of the CD ($15 - $5.24)
Reality is that you have paid 35% in Fees and Taxes on this $15 sale! Wow!
The other thing to remember here... is the fact that you are charged taxes on the shipping service. Now these taxes are embedded in the transaction.
This is what I meant about paying taxes on taxes.
And keep in mind that there may be a Promotional Fee tacked on too. A nice gimmick and key to success.
But another huge hit on the profits!
IT Doesn't seem FAIR right? The fact that Ebay is making a profit on a Fixed Cost (shipping charges) plus profiting on the Taxes.
* But keep in mind that you have shipping materials cost, power cost to run the computer and printer, and the ink for the computer. The gas cost to take the package to the Post Office. Let alone the time you put in.
So at the end of the day you might only make $8 on that $15 CD you sold.
This is what the CRA will look at with respect to your income revenue. The thing is you will have to register a Business to claim expenses and that means more cost and more work!
I have tried diligently to prove all these unfair Accounting Practices in Ebay's Fee Structure, but I digress. We can all prove a point though, and make the people running the Corporation and our Government understand that this must be a much better and equally benefiting system with Money paid for Service.
Just Another fine example of Capitalism and what drives up Inflation!
Like my Father use to say, "Look behind the Curtain".
