topic Re: Providing a Tax Invoice for Paypal Payments in Selling

Providing a Tax Invoice for Paypal Payments

toolman-online — Wed, 04 Nov 2015 12:11:02 GMT

I dont use Paypal for listings of a high dollar value due to the high fees compared to my banks credit card merchant rate.

My discussion point is this and relates to providing a tax invoice to customers.

If I sell an item for $1100 ($1000 plus $100 GST) and the customer pay via Paypal I am likely to receive $1071.05 This amount has a GST component of $97.37

So when I issue a TAX invoice for $1100 on paper I have collected $100 GST but in reality it is only $1097.37 that I have been paid with a GST component of $97.37

Paypal do not issue me with a tax invoice for their fees so where is the $2.63 shortfall going ?

When I do my BAS I say that I collected $97.37

The customer is expecting a tax invoice that says he or she paid $100 GST.

Therefore when the buyer claims $100 as a GST credit meaning the Australian Government $2.63 out of pocket.

Do Paypal submit a BAS and pay GST and taxes ?

They should !

Does anyone want to comment ?

Re: Providing a Tax Invoice for Paypal Payments

digital*ghost — Wed, 04 Nov 2015 12:43:32 GMT

@toolman-online wrote:

If I sell an item for $1100 ($1000 plus $100 GST) and the customer pay via Paypal I am likely to receive $1071.05 This amount has a GST component of $97.37

So when I issue a TAX invoice for $1100 on paper I have collected $100 GST but in reality it is only $1097.37 that I have been paid with a GST component of $97.37

I'm not registered to collect GST, so my understanding of the entire process, requirements etc, is a bit limited, but I would think this is the area that's tripping things up, in that what you end up with vs what you paid in fees to various third parties doesn't affect the fact that the total GST charged and paid was $100 (otherwise, the eBay FVF on the GST portion of the sale amount would also have to be taken into account, reducing the 'collected' amount even more).

In other words, the buyer pays $100 in GST, you collect $100 in GST, and the expenses incurred to collect the funds are just that - a business expense, ones which don't reduce the GST amount.

Re: Providing a Tax Invoice for Paypal Payments

lyndal1838 — Wed, 04 Nov 2015 15:46:03 GMT

You are 100% correct Digi.

The seller has collected $100 GST which is declared on his BAS and the paypal fees are a business expense just like the ebay fees.

The buyer should get a Tax Invoice showing the $1100 payment contains a GST component of $100.

Re: Providing a Tax Invoice for Paypal Payments

toolman-online — Wed, 04 Nov 2015 21:32:33 GMT

Thanks for your reply however i think you may be missing the point i was making

The buyer pays $1100 and expects a tax invoice for $1100

I receive $1097 and for the part that Paypal take i dont get a receipt and therefore cannot include that in my BAS.

My accountant works my BAS out on my bank deposits and declared cash.

Paypal take out their fees on the spot and do not issue a receipt.

If you are saying that I need to pay the GST for the Paypal component as well could you please tell me why that is and why since it is a business expense that I dont get a tax invoice from Paypal ?

My view is it is a big loophole in the tax system and that Paypal are avoiding tax

Ebay fees are not taken out of the payment and are billed and invoiced at the end of the month so do not need to be discussed.

Re: Providing a Tax Invoice for Paypal Payments

photo-video-accessories-pty-ltd-australia — Wed, 04 Nov 2015 21:47:39 GMT

Download your history from PayPal - this shows the Gross amount and the fee charged and the resulting nett amount. Your accountant will know what to do with this.

There is no GST involved in the PayPal transaction as you are dealing with an offshore entity.

Re: Providing a Tax Invoice for Paypal Payments

toolman-online — Wed, 04 Nov 2015 22:00:42 GMT

Thanks for your reply although it does not address the points I raised

PayPal Australia Pty Limited (ABN 93 111 195 389)

Downloading transaction records is not a tax invoice needed for completing a BAS

Paypal is an Australian company and has an ABN but issues no invoices for their services

Are you saying that you pay the GST for them ?

Re: Providing a Tax Invoice for Paypal Payments

saarzi — Wed, 04 Nov 2015 22:36:53 GMT

DG is correct...

Youre assuming Paypal collects GST. They dont. Papal Australia is GST free. They only provide a funds transfer service and no financial institution pays GST on those services.
You cannot get a tax invoice from someone who does not collect tax 🙂
Hence, downloading your Paypal history is exactly what you would do.

Also, do NOT try to claim on the GST if there is none.. it **bleep** off the ATO.

Re: Providing a Tax Invoice for Paypal Payments

saarzi — Wed, 04 Nov 2015 22:41:17 GMT

* no financial institution in Australia charges GST on funds transfer services. Paypal is considered a financial institution.

Re: Providing a Tax Invoice for Paypal Payments

saarzi — Thu, 05 Nov 2015 02:13:01 GMT

i hope that makes sense... sorry i was trying to reply to something in a simple straight forward manner, while on my phone.. while in bed.. with my dog sleeping across me... then realised I couldnt edit it, and went back to sleep Lol

You cannot get a tax invoice from Paypal, they dont collect GST on their services (and are not required to by law).

Just because a company has an Australian ABN doesnt automatically mean they pay or collect tax. Certain services from financial institutions are one of those exemptions.

So paypal fees are a business expense... you just cant claim the GST, because there is none. If you try to, its called double dipping, its illegal, and you could go to jail, let alone be fined etc.

If your accountant is telling you you need to get a tax invoice from Paypal, you need to get a NEW accountant right now!

Re: Providing a Tax Invoice for Paypal Payments

toolman-online — Thu, 05 Nov 2015 02:46:13 GMT

Thanks everyoner for their wild guesses and assumptions

Given that many of you dont have to complete a quarterly BAS here is a question to ponder anyway

You sell something for $1100 and receive $1070 from Paypal

Assuming it is old stock and you have no GST credits (some of you wont know what there are)

How much GST do you remit to the tax office ? $100 or $97.27 ?

Re: Providing a Tax Invoice for Paypal Payments

saarzi — Thu, 05 Nov 2015 03:54:12 GMT

uhh actually many of us DO submit BAS, including myself (not for Ebay, but for my own 'day job' business, that has 5 methods of payment, incuding Paypal). Its not an unusual or rare thing ya know.

Perhaps no one was understanding what you were saying because your original post wasnt clear, and its questions dont seem to be related to what you actually wanted to know?

Lets revisit them to be sure -

"Paypal do not issue me with a tax invoice for their fees so where is the $2.63 shortfall going ?

Do Paypal submit a BAS and pay GST and taxes ?"

These were answered.

"How much GST do you remit to the tax office ? $100 or $97.27 ?"

This, I dont see in your original post.

Now you have re-stated what you are after, or invented a new question, I DO understand, and given the attitude, Im sure you can find the answer yourself.

Re: Providing a Tax Invoice for Paypal Payments

toolman-online — Thu, 05 Nov 2015 04:18:46 GMT

Everyone seems happy to give an opinion here without fact and so far no-one can answer the last question without some doubt.

The answer I believe is that you pay the GST on what you receive as payment.

That being the case and if I provide the customer with a tax invoice showing GST of $100 (which they claim back) the government loses around $3 in GST

Added up over every business to business transactions thats a lot of money.

No-where did i say that Paypal need to pay gst but what I did say is that they dont provide any statement outlining the monies they take out and that your BAS is worked out on monies you receive.

Someone said that you can print this information out but the banks and proper financial institutions provide statements either on paper or electronically.

My ebay feedback reflects the way i do business and it shows my attitude and customer service

You dont see too many comments for bad attitude as does yours Saarzi

I started selling on ebay long before ebay australia existed (9 years for this id though) so I have a fair idea how the sytem works

Re: Providing a Tax Invoice for Paypal Payments

digital*ghost — Thu, 05 Nov 2015 04:26:48 GMT

@toolman-online wrote:

The answer I believe is that you pay the GST on what you receive as payment.

Yes, and you receive the full $100 in GST that the buyer pays.

The fact that PayPal take their fees for processing the payment automatically and you never actually see it in order to remit it manually post-transaction, as such, doesn't change that.

Treat the payments as though PayPal credited your account with the entire payment that the buyer makes, and then you paid them afterwards for their service. Buyer pays $1100, you received $1100, paid X amount in fees.

Their statements do summarise their fees, BTW.

Re: Providing a Tax Invoice for Paypal Payments

toolman-online — Thu, 05 Nov 2015 04:32:38 GMT

Many Thanks digital ghost

Many accounting packages use Banklink information provided by the banks to identify bank transactions such as deposits.

They calculate the GST collected.

They go by the amount deposited and calculate 1/11

Jamie

Re: Providing a Tax Invoice for Paypal Payments

digital*ghost — Thu, 05 Nov 2015 04:41:51 GMT

No problem - I'm still a way off having to register for GST, and currently do all my accounting manually with a spreadsheet, so do not envy you the joy of figuring all this stuff out.

Re: Providing a Tax Invoice for Paypal Payments

lyndal1838 — Thu, 05 Nov 2015 05:56:56 GMT

I submit a BAS for 2 businesses, neither of them being ebay.

You receive payments for $1100 with $100 of that being GST. You declare that on your BAS.

When you do your tax you claim the paypal fee as a business expense.....it is not declared on your BAS during the year.

If your accountant is not declaring $100 as GST then you need to ask why....and then change your accountant.

Re: Providing a Tax Invoice for Paypal Payments

toolman-online — Thu, 05 Nov 2015 06:06:45 GMT

Lyndal1838 Thanks for your input.

Re: Providing a Tax Invoice for Paypal Payments

westley2569 — Mon, 30 Jul 2018 01:58:58 GMT

Why am I out of pocket for a 16.00 dollar amount and I'm buying not on ebay

Re: Providing a Tax Invoice for Paypal Payments

padi*0409 — Mon, 30 Jul 2018 02:16:11 GMT

@westley2569 wrote:
Why am I out of pocket for a 16.00 dollar amount and I'm buying not on ebay

If you're not buying on eBay why have you dragged up a thread that's almost 3 years old to ask a question on the eBay forums ?????

Re: Providing a Tax Invoice for Paypal Payments

tashi911 — Tue, 13 Nov 2018 12:00:57 GMT

Are those little chinese shops who are charginf me 10% gst really paying this back to the aust govt or is it just free money for them