eBay overcharges by charging final value fees on GST
I have read many people complain about overcharging here only to be told that it's all correct and legal no matter how unfair it might seem; I would be happy for someone to point out if and how that applies to the following situation because I simply can't see it no matter how I look at it, and there is a dearth of information out there about GST on commissions.
1. Suppose I sell an item for $100 and eBay takes 10% FVF (to keep it simple), then I end up with $90 and eBay with $10 as the variable part.
2. Since both parties are registered for GST, I collect $100 + $10 GST from my customer and eBay collects $10 + $1 GST.
3. The ACCC says display prices must include all applicable taxes and charges, and eBay says listing prices include GST where appropriate.
4. The listing price for a $100 item is therefore $110 GST inclusive. eBay charges 10% FVF on this, and collects $11 GST inclusive. They then add in any other applicable fees and charge GST on the total, or another $1.10 on top of their fee.
5. This amounts to fees being approximately 1% higher than advertised and is a significant gouge out of profits.
Unsurprisingly, most responses from eBay customer service have disingenuously asked where the error in the calculation is, or exposed their ignorance of the law. The last response promised that the matter was being passed over to a specialist team (specialising in fobbing off customers, no doubt) and assured me there was no need to email again. I don't know about need but I certainly agree there is no point.
A read through the ATO community website indicates that their position is that we need to contact eBay to sort out GST issues; the ACCC seems uninterested in looking into it, presumably considering it's not a matter of public interest.
Before I start down the path of legal action I would be interested to know if anyone else has been affected by this and what was done about it.
petersbargainshop
·3 years agoGST may not be applicable to your eBay fees. Taken from the selling fees information
If your registered address is in Australia, GST of 10% is payable on your eBay fees. Unless you provided eBay with your ABN and registered for tax exempt status, we'll add GST to your eBay fees.
If you select the link it will tell you if you are registered as GST exempt.
If your GROSS revenue from business activities (not profit) is greater than $75,000 per annum then you need to register for GST. If your gross sales on eBay (exclusive of fees) exceed $75,000 and don't register you can be deemed as being a seller for GST purposes and the GST component of all sales from the first financial year when you exceeded the threshold will become payable.
Can I also say that as a former ATO and ACCC employee there are a number of false assumptions in your worked example. I suggest that you seek professional advice if you're not completely familiar with the application of the tax laws.
kh-jean
·3 years agoHi everyone,
This discussion has gotten a bit heated. Please remember that, while it is fine to disagree with others, discussion should always remain friendly and respectful as required by the Community Guidelines.
Thank you for your cooperation.
*sons_n_daughters*
·3 years agoMy head hurts. This is going to be one of those 50+ message threads, I can see it a mile off.
gutterpunkz05
·3 years agoYeah I am out.
They can pay for assistance if still needed.
gutterpunkz05
·3 years ago2. Since both parties are registered for GST, I collect $100 + $10 GST from my customer and eBay collects $10 + $1 GST.
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Incorrect, You collect $100 including, $10 GST, The $10GST is not yours and is not added to the sale price,
So in effect you have sold the item for $90.
Then of course there is the ebay sale/service fee + GST to also be deducted, so you net sale is about $79
worldofannwn
OP3 years agoThe sale price is $100 and eBay charges $10. With GST, the list price is $110, and eBay collects $11.
gutterpunkz05
·3 years agoBefore I start down the path of legal action I would be interested to know if anyone else has been affected by this and what was done about it.
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Don't waste your time and money, the process is correct, just ask your accountant, if you don't have one, get one. It will be much cheaper.
imastawka
·3 years agoI would hope with over 17K+ feedback as a seller, that you have an accountant to explain it all to you.
worldofannwn
OP3 years agoI would hope that people would realise that, having discovered an anomaly that eBay refuses to look into, I am seeking advice and opinions of others who may have spotted the same anomaly before taking any legal action, which may include but is not limited to contacting an ombudsman, consulting a lawyer or having an accountant explain it to me.
I also don't see how my level of feedback or the question of having an accountant has any bearing on the matter.
imastawka
·3 years agosugar249
·3 years agoThey are happy to take any advice or opinion, as long as it agree's with them, if it doesn't you are a troll. LOL
In all seriousness, if there was an issue, the ATO, a good tax lawyer or even a half dodgy accountant would have prosecuted this years ago.
domino-710
·3 years agoWhich is why I didn't even ' buy ' in. LOLOL
sugar249
·3 years agoHere we go again, look back at about 200 other posts covering this exact subject.
Take it up with your lawyer, and they will laugh at you as well. If Ebay were breaking the law, someone would have already taken the appropriate action.
If you don't like it go to Gumtree and Facebook market place, where you wont be paying GST but will be scammed.
Enjoy
worldofannwn
OP3 years agoI don't think a lawyer will laugh at me if they understand my question, which you clearly don't.
But please, go ahead and point to the 200 other posts that cover eBay charging commission on the GST component of a sale. I covered that in my opening sentence.
If you have nothing useful to contribute, please don't contribute.
sugar249
·3 years agoGreat, can you let us know what your lawyer says,
worldofannwn
OP3 years agoI would but I think the answer would be beyond your limited comprehension. Now please stop trolling.
padi*0409
·3 years agoMaybe if you had spent the same amount of time talking to eBay about your GST registration problem as you have posting here - there wouldn't be a problem anymore.
worldofannwn
OP3 years agoYou have no idea how long I have spent being trying to talk to eBay and being ignored and stonewalled. Maybe if you don't have anything useful to add you could avoid adding it anyway.
gutterpunkz05
·3 years agoNonetheless, if eBay were not collecting GST on my fees, under this scenario they are still collecting fees when they shouldn't. As far as I understand, you either charge commission on an ex GST price and then collect GST, or you charge commission on a GST inclusive price. Not both.
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As per my previous. Ebay charges one FVF
worldofannwn
OP3 years agoNot sure what you mean.
The examples for GST on commission that I read state that you can charge one way or the other, it works out to the same amount. If eBay is charging GST on the invoice total then (IMHO) they should be charging FVF on the ex GST amount according to that.
There's still only one FVF
gutterpunkz05
·3 years agoStill wrong and you can't even figure out where. BYE
gutterpunkz05
·3 years agoYou pay GST on the ebay fee ( for service), not the sale. If you have your ABN registered with ebay, they do not collect GST on the fees you pay to ebay.
Trying to keep it simple.
gutterpunkz05
·3 years agoYou list an item for $100 if you are registered for GST, that price includes GST. If you are not registered, the listing price does not include GST, as it is illegal for an unregistered seller to charge GST.
So you have sold the item for $100 and it is up to you to declare the sale and GST to the ATO.
Now ebay collects there sale fee, service fee, whatever you want to call it,but it is the under the service part of GST. Now using your example of 10% sale fee. Ebay collects $10 as there Fee and is also required to collect GST on this payment, so there fee is $10 (+ $1 GST) ebay keeps there $10 and remits the $1 GST to the ATO.
You declare your sale to the ATO, and Declare receipt of $10 GST (from your sale price, nothing to do with ebays $10 Fee.) You also claim a $1 expense for the $1 GST that you have paid to ebay.
As stated earlier, register your ABN with ebay, and they will not collect GST on your fees.
worldofannwn
OP3 years agoNo, I don't list an item for $100. The price of my item is $100, but since I am registered for GST I am required to collect $10 and since the ACCC says I must include that in my display price, I list the item for $110.
So I have sold the item for $110 and I declare the sale and the GST to the ATO.
Now eBay collects their fee, and this seems to be where the problem is:
I receive the same amount whether I am registered for GST or not, except that being registered I don't pay the GST (only the end-user pays) so the $1 that goes to the ATO in the unregistered case is winding up in eBay's coffers. Overall that extra $1 is increasing my final value fees by 1% above the stated value, so how is that not overcharging?
If this is legal, it shouldn't be. It's not supposed to cost anything to be GST-registered. The only information I can find on the ATO site is examples, although they do show that it's either commission on ex. tax + GST on commission or commission on GST inclusive. eBay is doing both and I can find no precedents or rulings either way.
I already have my ABN registered with eBay and have done since July 2018. They are still charging GST and I have had no success getting them to fix it. They even had the temerity to tell me the ATO hadn't approved it. However even if they were not charging GST, the only difference would be that I remit the full $10 to the ATO. They are still charging fees on the GST component.
I appreciate you taking the time to assist, but I am not convinced that it is correct.
worldofannwn
OP3 years agoPlease read my post.
eBay is charging their fees on a GST inclusive price. That means, by my example, that they are collecting fees on $110 when I actually only receive $100, $10 of that being collected on behalf of the ATO.
I have my ABN registered eBay and they still collect GST on their fees. I have been unable to get them to fix this, either.
Nonetheless, if eBay were not collecting GST on my fees, under this scenario they are still collecting fees when they shouldn't. As far as I understand, you either charge commission on an ex GST price and then collect GST, or you charge commission on a GST inclusive price. Not both.
Trying to keep it simple.
gutterpunkz05
·3 years agoI can read your posts but they are full of errors, Go and PAY an accountant to be told exactly the same.
A $100 domestic sale does not increase to $110.
Ebay FVF is charged on the TOTAL invoice. (Quite Clear, legal and approved )
Fees when you sell your item
You pay one final value fee for items you sell on eBay, with no third-party payment processing fees.
The final value fee is calculated as a percentage of the total sale amount per item (item price + postage and handling charges + any applicable taxes), plus a fixed charge per order.
You have agreed to this Fee structure. So to save yourself some money, Copy the above, place it in an envelope with a couple of hundred and slide it under your lawyers door. Then walk away before the laughing starts.
worldofannwn
OP3 years agoI never said it did. But if I want $100 for an item, I need to list it for $110.
I am aware it is charged on the total invoice. But there is a total invoice ex tax and a total invoice including GST. If the fees are charged on the inclusive total then as a percentage of what you get for the item they are higher for a GST-registered seller. I'm surprised the ATO allows that, and the ACCC says if there are multiple prices, you must offer your service at the lowest one. Not to mention how unethical it is to take a percentage of other people's money as part of the commission, no matter how legal it may be.
I'm not sure you've fully understood my problem and I may not have explained it well enough, perhaps I'm looking at it from the wrong angle. I may be barking up the wrong tree, but it's the right forest, and you've given me more clues in a day than eBay has in a couple of years.
Thanks for the help, I don't know why eBay couldn't just tell me the same things you just did.
davewil1964
·3 years agoI don't know why eBay couldn't just tell me the same things you just did
They did. in the bit GP copied and pasted.