Etsy Collection of HST/GST tax for all Canadian Sellers regardless if required by law or not

[#1]

I am a Canadian based Etsy shop.   I just received an email from Etsy outlining mandatory collection of Canadian GST/HST taxes on all sales made to Canadian customers.   I am currently exempt under Canadian regulations from remitting taxes as my annual sales are below the required sales volume and given I make everything that I sell, I can’t, and don’t wish, to grow sales to that point.  

Normally I would be pleased that Etsy is taking an administrative step off my plate.  However, Etsy’s action is both forcing me to apply for a tax number (when I don’t need one) and becomes another added cost to my Canadian buyers.  It is also stripping away a sales advantage that the “Feds” had given to small entrepreneurs.  Sigh…..

[KnoxMountainKnitCo]

I don't think I can post a link but it's under Shop Manager | Finances | Legal and Tax Information and then go to edit your tax information and it is the blurb before the spaces to add your tax numbers.

[cindylouwho2]

@KnoxMountainKnitCo  my tax info is all entered, and I am not in the same province as you. So I don't see that. 

[KnoxMountainKnitCo]

It only shows up for me when I go to EDIT my tax info.

[cindylouwho2]

@KnoxMountainKnitCo  people get their shops closed for trying to edit, so I don't touch that page LOL

(I trust you; I am just unable to verify on my end because when my Etsy shop closes, it's going to be on my terms. Dealing with a friend in this very situation today - 36 hours of forced vacation mode & counting, with nothing but canned Support responses, all for an issue that Etsy said was fine months ago. She might not have tried to update the page without this vague GST update. I'm not going to be another victim)

[KnoxMountainKnitCo]

OF COURSE THEY DO. Good to know. I noticed it because I had to add in my PST number. I'll make sure not to check for it again tho. Thank you!

[TreeTreasuresCanada]

@KnoxMountainKnitCo  Thank you for your clear info on locating the information.  As Etsy already had my GST number, I didn't click "Edit" and it's logical to believe that sellers who had already added their GST numbers wouldn't click "Edit".   Unfortunately finding the location of the information doesn't clear up our questions and only adds to our (and Etsy's) confusion.  I am still waiting for a reply from Support.

[KnoxMountainKnitCo]

This is the response I got from Etsy support:

Taxes must be correctly represented to buyers. As a result, we're removing the sales tax tool to help reduce the number of times a buyer is charged sales tax on a physical item purchase without their permission.
 
And if you need to charge tax on purchases made by buyers within your country or outside of your home country, you’ll need to incorporate that tax into your physical item prices.
 
You may wish to set up a different listing price for orders shipping within your country and orders shipping outside your country. Learn More.
 
To adjust domestic and global pricing, go to the Listings tab in your Shop Manager dashboard. Under ‘Inventory and pricing,’ choose a ‘domestic price’ (for items shipping locally) and ‘everywhere else’ price (for items shipping internationally) for each of your listings.
 
In response to your last inquiry, I can confirm that beginning July 1, 2022, Etsy will collect tax where it is required. Before any changes take effect, we will notify you and give additional information.
 
In the meanwhile, you might want to consult with a local tax specialist for more information.

[cindylouwho2]

@KnoxMountainKnitCo  so just a canned response. I got a canned response too, but it did not even address the tax tool LOL

It will take a few days to get to someone who actually knows what they are talking about and can answer actual questions. 

[KnoxMountainKnitCo]

This was in response to the questions I had to my first canned response. 

I did talk to Etsy support this morning and was first told they can't give me tax advice (understandable but I'm not even looking for tax advice) and was then told again that I will have to build taxes into my pricing. 

I wasn't expecting a different answer, but maybe the more of us who contact them, the more likely they are to fix it? Wishful thinking?

[cindylouwho2]

@KnoxMountainKnitCo  it's absolutely outrageous if they expect us to incorporate different tax rates for every province with zero tools, so we definitely have to push this. (The fact they edited the announcement is almost encouraging on that point, as it usually takes them days to fix all of the various mentions when they screw up like this) Keep pushing for a non-canned response, explaining why just changing your prices is impossible, as the difference in rates is 200%. I will do the same. 

I know a seller currently talking to a Canadian reporter about unfair treatment of sellers here. I'll put a bug in their ear on this issue, as that sort of outside pressure is the most likely thing to trigger change at Etsy these days. 

[TheOliveSparrow]

How can it even be legal for them to ask us to incorporate taxes into the price? Taxe is based on the place the person lives, not where the seller lives. Them americans really have no clue what they are doing with our canadian tax.

[cindylouwho2]

@TheOliveSparrow  It's legal to include GST/HST in the total price: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/charge-col...

"...you have to either show the amount paid or payable for the supply separately from the amount of GST/HST payable on the supply or show that the total amount paid or payable for a supply includes the GST/HST."

Of course, that isn't done very often in Canada, and I have never seen it on a website. It's usually used for things such as gas, a drink bought in the stands at a hockey game etc. All of which are sold at one location, and there is one tax rate at that location. Selling online just doesn't work with that rule. 

[CleverLittleEars]

So when it says choose a price for each of your listings... it means one . at. a. time? This has been a god-awful and completely preventable mess (don't our fees cover the expense of hiring competent staff to develop policies and communications?)  - but their solution is that we should go through our listings - one at a time - what, on the stroke of Midnight July 1? Last I checked, we can't bulk edit domestic/other pricing...

[cindylouwho2]

@CleverLittleEars yes, one at a time. Pricing for the whole country, even though the tax varies by province. 

And digital listings apparently do not have the domestic pricing tool! 

[mrunions]

I am trying to update my Tax info. I am an incoporated business. So last night I go to update and get an error message and my shop was put on Vacation mode. So annoying. Eventually my shop was taken off vac mode but still getting an error message as what I was inputing did not match.. So confusing especially for people who are a corp business. I put all the correct info in and now need to send proof. Oh edit to add my shop is again now on VAC mode because my documents are under review. UGH>

[cindylouwho2]

@mrunions I know Canadians in similar situations, all using their business names instead of DBA their own name. They've spent months trying to fix this and Etsy is of no help. 

If you get any solutions, please let me know. Good luck to you! 

[melodybridalboutique]

@cindylowwho2 has their shop been on vacation then for months? :0

[cindylouwho2]

@melodybridalboutique  no, because Etsy apparently said the situation was resolved. But trying to update the page for the new GST announcement seems to be triggering the closures now. 

[KalxDesigns]

I am still utterly confused on this.  I have a tax ID registered, customers having been charged sales tax, that amount to sent to me and I remit the taxes to the CRA (less input tax credits).  Now it seems that Etsy will continue to charge customer sales tax, but will remit it directly to the CRA??  But, we are being told to build the taxes into our item prices...... and remit the taxes to CRA??? Does that mean that the CRA will receive two remittances for the same purchase (once from Etsy and once from the seller), i.e., and the buyer would paying twice (once thru taxes charged by Etsy and once thru a higher price for the item??  This makes absolutely no sense.  Please tell me I've misunderstood!

[KnoxMountainKnitCo]

It's not super clear what Etsy intends to do for us who are registered. It sounds like they are no longer going to collect taxes for us and they want us to build the tax into our listing price by increasing our prices. This is what myself and several other shops have been told by Etsy support.

[TickleYourWitch]

Why can’t they continue as now? Charge all buyers gst/pst and if the seller is registered, we get the money to remit ourselves and Etsy remits amounts collected from unregistered sellers. That would keep a level playing field for all when it comes to pricing. This is stupid. 

[MrsDsHandKnits]

I for one, do not understand Etsy's idea of suggesting registered sellers adjust their prices...there is no such suggestion on eBay, and I don't know what Amazon did when they introduced their sellers to the Canadian taxation process.

[KalxDesigns]

So, buyers who purchase from a non-registered seller would be charged tax, but those who purchase from registered sellers will not?  As far as I know, according to tax rules, buyers' receipts are supposed to clearly separately identify the sales taxes they are being charged on a purchase.  If we have to build the taxes into the price of the item, it would contravene the tax rules.

[cindylouwho2]

@KalxDesigns  the tax rules expressly state you only have to tell people the tax is included; you don't need to break it out: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/charge-col...  "you have to either show the amount paid or payable for the supply separately from the amount of GST/HST payable on the supply or show that the total amount paid or payable for a supply includes the GST/HST."

So it is possible that Etsy thinks this is a common practice - which it isn't, most places you get a receipt - and decided this was the easy solution to avoid having to do more work on their end. Just download the work to the sellers & keep the shareholder payouts high! /s

ETA - that's for GST/HST, but I am not sure about each individual province that has their own tax as well. 

[MrsDsHandKnits]

have no idea what is happening with those Etsy sellers who are registered, (I sell less than $1500/year total across 3 selling sites, so none of this affects me), but I do know eBay sellers are wrapped up in as much confusion as the Etsy sellers. However, it does seem there is some sort of form that the registered eBay sellers have to fill out, but even that form doesn't seem to be decisive enough, nor have the clarity for what is required and that just adds more confusion.)