Import GST charge calculation based on pre-discount price, this doesn't seem right?

[foxfrontier]

Ebay seems to be charging GST based on the "pre-discounted price", for example I purchased an item..

Item Price: $10.38

I used a 5% discount voucher (coupon code), so effectviely $9.86 pre-tax

Credit card charges

1) 9.86 (paid to seller)

2) 1.04 (paid to ebay for "GST")

Total $10.90 charges

If I were to buy a 10.38 +10% GST item in any Australian store it would cost = $11.42

Then if I get a 5% discount it would = $10.85

Not $10.90.. so there is currently a 5 cent error in ebay's favour.

I'm not worried about my 5c of course, but multiply that by the whole of Australia and ebay is skimming a tidy profit there!!

For me the reason this is annoying though, is that I buy items for my business and because the tax is not adding up to 10%, my accounting package requires me to jump through hoops to reconcile it.

Fair enough it it were "correct", but I don't think ebay is correct in this calculation?

[kopenhagen5]

Keep in mind the sale amount is still 10.38 to the seller.

eBay put in the 5% on your behalf.

[foxfrontier]

@kopenhagen5 there are rules on how prices are advertised and GST charged in Australia.. the more I think about it, this cannot be right..

I know what you mean that ebay has "put in the 5%" and taken it off the item price, BUT on the credit card statement they are explicitly labelled as item and "GST" charges. And that GST charge is exactly 10% of the pre-discount item price.

So if you see my example, eBay is effectively charging more than 10% GST, which is definitely not correct.

If it was all in a lump sum single transaction then it would be 10% of the whole.

10.90 = 9.91 + 0.99 GST = 10% GST ie. as a business I would claim back 0.99

The way the credit card transactions read it is explicitly

9.86 + 1.04 GST = 10.55% GST

ie. I can't see how I can claim back 1.04 GST on this 10.90 purchase.

Is eBay paying $1.04 to the government, or actually 0.99 which is 10% on fees collected?

[gutterpunkz05]

ebay pay 5% on your behalf, but you are still responsible for the full cost of GST on the original pre discount price.  Read the T&C

ebay does not take any responsibility for taxes.

[gutterpunkz05]

I think you are forgetting that  if you buy the item in OZ for  $10.38, the GST is included in that price.  But if you buy an item OS for $10.38  GST  (1.04)  has to be added to the purchase price.  Then of course there are currency rates and foriegn transaction fees

etc.

[kopenhagen5]

You have the GST as 1.04 on your credit card so you can claim 1.04 as that is what you have paid.

If you get a proper statement from the seller it would show - 

Sale of item xxxxxx.................................10.38 debit

GST on total ............................................1.04  debit

                                              Total...........11.42 debit

payment received from buyer.................. 9.86 credit

payment from buyer of GST.....................1.04 credit

payment from eBay.................................. 0.52 credit

Balance.....................................................0.00

You have paid the full gst amount and eBay have just contributed 52 cents to you paying the invoice.  

I don't see any grey areas here.

[foxfrontier]

> You have the GST as 1.04 on your credit card so you can claim 1.04 as that is what you have paid.

eBay do not issue a valid "tax invoice" showing workings as you do and even they did, I am sorry but I don't think that is how it works "in the Australian implementation of the GST system".

Anyway I was curious and couldn't find the legislation, so went ahead and discussed with the ATO directly.. their initial thoughts agree with my assessment.. so we'll see where it goes.. seems crazy to think it could be wrong for this long and nobody has picked it up! (since the 1st of July 2018)

[k1ooo-slr-sales]

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@foxfrontier wrote:

@kopenhagen5 there are rules on how prices are advertised and GST charged in Australia.. the more I think about it, this cannot be right..

I know what you mean that ebay has "put in the 5%" and taken it off the item price, BUT on the credit card statement they are explicitly labelled as item and "GST" charges. And that GST charge is exactly 10% of the pre-discount item price.

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I am assuming the item was from overseas (?) . . . . . . otherwise the price would have been GST inclusive (as you note).

If you paid using PayPal funded by credit card, then there would be two PayPal payments.  The GST payment would show on PayPal as that full amount taken as GST.  All the GST that eBay collects is remitted to the ATO, so they are not keeping your 5cents.

The GST on Low Value Imports legislation allows Electronic Delivery Platforms (EDPs) such as eBay to show prices ex GST so long as they include a “GST may apply” type message in the listing . . . . . . . which they do do.

On search result lists they include the message, and on the listing they include it on the Postage and Payments tab.

Now, the 5% voucher, I tend to think of it as a ‘rebate’ rather than a ‘discount’ i.e. I pay the total but get some back.  On PayPal it will show that the full amount was paid to the seller but that some of that amount came from eBay.  The seller would not know that, they would just see the full payment for the transaction.  I just checked and it isn’t a 5% discount, it is 5% off when using a redemption code.

Now I realise that it is an exercise in semantics when I talk about redemption codes, discounts, rebates or % off  . . . . . . . but that is how they word these things, and you can be sure that they have the wording right in order to meet their obligations regarding GST

For a real life example, if Samsung have a “$100 off via redemption when buying from Harvey Norman (HN)” offer on washing machines the price you pay to HN includes GST on the ticket price, and you then claim back $100 from Samsung.  You don’t then get $9.09 refund of GST on that $100.

I used a $20 eBay voucher on a $19.81 transaction a couple of weeks ago and still had to go through PayPal at checkout even though I didn’t pay a cent.  I still got a PayPal transaction email even tough I hadn’t paid a cent.  In effect, eBay gave me a $19.81 rebate.  Because the items were domestic there was no GST to add.

[foxfrontier]

If something is advertised at the GST exclusive price (common for B2B goods), then the GST is added on, yes, but any discounts are applied to the "GST inclusive" price. ie. you get the discount applied to the tax too. And you "tax invoice" will display the GST as 10% of whatever the total price is. There aren't any exceptions where the GST is greater than 10%. This is the issue and where it differs from the hundreds of different type of sales tax rule in other countries and states, etc.. eBay states the greater than 10% tax price on it's order confirmation and the actual credit card charge is split into separate item/tax transactions.. again greater than 10%. It's pretty clear cut this is wrong and would cause people to over claim GST from this info. Unless there is some special tax ruling that eBay has with our government - which I seriously doubt. Or these are special rules for gst on imports that I am not aware of. Anyway the details have been reported to the ATO who will do a proper investigation and ruling.

[k1ooo-slr-sales]

The item price is not discounted as the seller gets the full amount, the amount YOU pay is discounted due to eBay paying some of the total.  The GST is based on the transaction total, which is the FULL amount.

When a seller offers a discount, that is clearly displayed on their listing, the GST would apply to the discounted price.