Returns and GST

[jacky5819]

I am a buyer who has already had to pay GST on goods bought from overseas. Yep, annoying but that's the law. My issue is, what happens if I do not receive an item or I need to return it. Will the GST amount be returned to me by ebay? Will this happen automatically?

Cheers!

[lyndal1838]

Instead of complaining you should be very appreciative that the seller was good enough to refund the amount that they received as they are not required to refund for items rejected by Customs....they are considered to be received.

Again, see my answer.....the seller can only refund what they have received.  They probably don't know anything about the GST and unless the seller uses the Refund button on the original transaction in paypal, paypal is not alerted to the fact that a refund of the GST is applicable.

[kerrjess]

lyndal1838 - Bit surprised at the tone of your reply and wonder whether you had read my post thoroughly.

I stated that the seller was good enough to refund the amount that had been paid to them. And I didn't make any mention of PayPal in my post.

My warning and complaint was against EBay which is the entity who adds the GST to the total payment and remits the GST amount to the ATO. By Law, if I receive a refund for an item on which GST was charged, I am entitled to have the GST refunded by the entity which charged me the GST - EBay.

But unless you actually go through the process of "Request a Refund", Ebay says they are unable to refund the GST. 

NOTE - Ebay advice is to always contact the seller first which is what I did, and the seller was very nice and agreed to refund the amount she had received (we also had a couple of friendly messages about customs issues).

I've been doing GST returns since they were first introduced in July 2000 and handled thousands of refunds which included GST, and it is not a difficult process.

My warning and complaint was with EBay trying to fob me off saying I couldn't get the GST refunded as I had not "followed the proper Return process", despite their advice I mentioned above.

It was only when I kicked up and told them that was illegal that they said they could issue a refund. Or they could give me a voucher which would be easier for them (don't know why a refund process is so difficult for EBay.

So I was actually trying to help buyers, including perhaps you, by advising that you are legally entitled to the GST refund by EBay.

And that if you have amicably resolved a refund from the seller without escalating it further, EBay will try and tell you they are unable to process a GST refund. But if you insist that you have a legal right to a refund, they will then agree to a refund, or an EBay voucher if it is a small amount. I'm just glad my purchase wasn't a big value one.

Hope that's cleared up now. 

[kerrjess]

FYI - Sorry you got fobbed of by EBay. Ebay adds the GST amount to the total bill before it goes to paypal. So it's Ebay that needs to refund you. Just had this issue myself - refer my post (maybe a bit late for you now) below "GST Refund Warning".

[kerrjess]

Sadly the case still Countess. Feb 2019 and still problems. I just got a refund from a good seller overseas for goods rejected by customs. But trying to get GST refund from Ebay very difficult. As I hadn't gone through the "Return for Refund" process, they wouldn't be able to refund the GST. Pointed out that was illegal and got my money back.

[lyndal1838]

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@kerrjess wrote:

lyndal1838 - Bit surprised at the tone of your reply and wonder whether you had read my post thoroughly.

I stated that the seller was good enough to refund the amount that had been paid to them. And I didn't make any mention of PayPal in my post

Yes, I did read your post ......not sure what is wrong with my tone but I still stand by my reply.

The seller was very obliging to give you a refund when the goods were seized by Customs as she is not obliged to do so.  They are considered to have been delivered.

My warning and complaint was against EBay which is the entity who adds the GST to the total payment and remits the GST amount to the ATO. By Law, if I receive a refund for an item on which GST was charged, I am entitled to have the GST refunded by the entity which charged me the GST - EBay.

Yes ebay collects the GST from you but it is held in a paypal account in ebay's name until it is remitted to the ATO.

If the seller refunds your money USING THE REFUND BUTTON on your paypal payment, paypal is alerted to the fact that the balance of the money you paid (i.e. the GST) is also to be refunded.  It makes no difference why you get the refund....whether you claim through the ebay dispute process or it is  private refund from the seller.  As long as it is processed through the paypal payment the GST should be refunded along with the item price.

But unless you actually go through the process of "Request a Refund", Ebay says they are unable to refund the GST. 

NOTE - Ebay advice is to always contact the seller first which is what I did, and the seller was very nice and agreed to refund the amount she had received (we also had a couple of friendly messages about customs issues).

I've been doing GST returns since they were first introduced in July 2000 and handled thousands of refunds which included GST, and it is not a difficult process.

If you do not go through the ebay dispute how would ebay even know that you have received a refund?  And why would they issue a GST refund just on your say so.   There are very strict rules surrounding the GST and unless ebay has something concrete to show the ATO as to why they gave back the GST to a customer then they are in breach of the rules.

My warning and complaint was with EBay trying to fob me off saying I couldn't get the GST refunded as I had not "followed the proper Return process", despite their advice I mentioned above.

It was only when I kicked up and told them that was illegal that they said they could issue a refund. Or they could give me a voucher which would be easier for them (don't know why a refund process is so difficult for EBay

In this case ebay was quite correct......if you had followed the ebay refund process you would have had the GST refunded along with the item price.  If your obliging seller had followed the rules you would also have had the GST refund as it is all dependant on the refund processing through the original payment in paypal.

So I was actually trying to help buyers, including perhaps you, by advising that you are legally entitled to the GST refund by EBay.

Very admirable of you but in order to help others you need to understand the process yourself.  You are entitled to the GST refund but not from ebay.....it has to come from the paypal GST account which is in ebay's name.

And that if you have amicably resolved a refund from the seller without escalating it further, EBay will try and tell you they are unable to process a GST refund. But if you insist that you have a legal right to a refund, they will then agree to a refund, or an EBay voucher if it is a small amount. I'm just glad my purchase wasn't a big value one.

And ebay would be right.....it is very difficult for them to process a GST refund if the refund was not processed through the ebay process.

Hope that's cleared up now. 

Ditto

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[countessalmirena]

@kerrjess,

The advice given to you by the eBay chat rep is utterly wrong, as you clearly knew! It's disturbing to think that some eBay members who weren't sure of their facts may have been fobbed off with illegal advice in this way.

I'm very worried about the wording eBay gives (new wording - this is the first time I've noted it) on the Paying tax on eBay purchases page:

❝Any refunds processed outside eBay's systems are not eligible for a tax refund.❞

This does not seem to be in line with eBay's User Agreement:

❝If you are a buyer, you may see "GST may apply" when viewing items on eBay that are located overseas. You acknowledge and agree that if you buy a low value item on eBay from outside Australia, you will be charged 10% GST on top of the seller's item price (applied in your cart and at checkout). If there is any dispute as to the GST you have paid on an order, you should contact eBay. If you receive a full or partial refund for your purchase, you will also receive a refund for the proportionate amount of GST.❞

The ATO makes it clear that if a buyer returns goods for a refund, the GST portion must also be refunded. (I.E., if you return something and get a 50% refund, you must also receive 50% refund of the GST that was collected by eBay.) Without question, this applies to the situation of a full refund when an item doesn't arrive - and the buyer is entitled to a full refund including the GST portion. The GST portion can't be paid by the eBay seller because it's not collected by the eBay seller. If the seller refunds through PayPal, is that considered "outside eBay's systems"? At any rate, eBay must not refuse to refund the GST portion of a sale which is cancelled.

eBay making a caveat that they won't refund the GST portion if it's outside their system is a worry - unless eBay means some method of refund that isn't verifiable. (I can see a potential loophole if buyer and seller are complicit in something dodgy with avowed Western Union refunds in a mutual scamming scheme...)

❝Returning goods and GST refunds

The GST rules that apply to goods returned in our domestic market also apply for returned low value imported goods. This means if you return goods and get a refund, you should also get a refund of the GST.❞

The ATO also makes it very clear about the EDP operator being responsible for the GST (including refunds):

❝If a customer is provided with a refund for goods that are returned and you have already paid GST to the ATO, you can make an adjustment to reduce the amount of GST payable in your next return.❞

The ATO also has a page outlining Requirements once you are registered, wherein the issue of returned goods is addressed:

❝Returned goods

If a customer is provided with a refund for goods that are returned and you have already paid GST to the ATO, you can make an adjustment to reduce the amount of GST payable in your next return.❞

On the same page under Fixing mistakes, it says:

❝Make sure you correct mistakes straight away.

For example, you may later find that you have incorrectly charged GST on a sale of goods that are not low value goods or to a customer that is not a consumer.❞

Charging GST on a sale that is cancelled is also a "mistake" and must be remedied immediately.

ACTION

In my view, offering a voucher is not complying with the ATO requirement. You were entitled to a full refund of the GST portion and it was eBay's responsibility to action that immediately.

If I were you, I would be phoning the ATO on Monday and addressing this. The ATO has been really good with updating the information on their pages about the low-value imported goods particularly in response to questions about EDTs (eBay being the main one) - I've literally seen pages change as they happen. It is my view that clarifying the issue of refunds in respect of non-received low-value imported goods is necessary.

I will contact the ATO as well, but since this is your personal experience, you should also do this because what you say about eBay's chat rep giving you that incorrect advice is important, and you would have the chat transcript, presumably? That means you have the specific evidence, whereas I can only report at third-hand.

[countessalmirena]

lyndal, the problem that I can see is if the refund was actioned as some sellers appear to do - through PayPal - then the GST portion must be refunded by eBay. I query eBay's correctness; it is part of the whole mess that arises with GST, EDPs, sellers, and refunds.

It's a bit like tutti-frutti ice-cream...

I 100% agree that sellers should refund using the refund button if actioning the refund through PayPal. Some won't (I think because a high-ish number of refunds can trigger action on eBay's part against the seller's account...? Am I correct? Or did I dream that???)... and while that situation holds true, sellers will continue to do what they have to in order to protect their account, I suppose.

[lyndal1838]

Countess, as I see it, payal is responsible for the refund of  the item price....they take it from the seller's pp balance or cc/bank account as authorised by the seller.  That should also trigger the GST refund from the ebay account in paypal.

Unless the refund has been initiated via an ebay dispute there is no way ebay is even involved in the process and ebay should not be paying any refunds that are not attached to a dispute.

[digital*ghost]

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@lyndal1838 wrote:

Countess, as I see it, payal is responsible for the refund of  the item price....they take it from the seller's pp balance or cc/bank account as authorised by the seller.  That should also trigger the GST refund from the ebay account in paypal.

Unless the refund has been initiated via an ebay dispute there is no way ebay is even involved in the process and ebay should not be paying any refunds that are not attached to a dispute.

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PayPal process two separate payments when an item is purchased from overseas, the buyer receives a receipt for both, but it's likely the same (for PP) as when a buyer purchases from different sellers in the same transaction, just with ebay being a different entity that is receiving money at the same time as a seller. eBay is the "seller" / controller of the account and receiver of the funds, so eBay needs to authorise the refund, since the transaction is between the buyer and ebay. 

For future reference "the eBay system" isn't limited to the return or dispute process, it also includes the cancellation process - the seller needs to initiate the cancellation through eBay, which will then trigger instructions to PayPal to refund both payments. Partial refunds are the biggest concern, as if using the eBay system, they can only be done through a return dispute. 

Plus, it's not like eBay don't know when a PayPal refund has been issued outside of their system - the transaction payment status changes, regardless of the amount and reason for the refund, so this theoretically (or at least logically) could trigger an authorisation from eBay to refund whatever amount of GST is due.

[beanobeans]

I recently got a refund for two items from China which didn’t arrive. They were refunded as separate transactions rather than one full refund. As a result, I received only one GST refund from eBay. I got on the online help chat and was told that gst refunds are processed manually and I’d have to wait 7-10 business days for it. I pointed out that I’d received one gst refund on one item instantly once the seller refunded me, but not the other. They could not explain why one was instant and the other not and even suggested they didn’t know what that transaction was and that it must have come from the seller. I protested that the seller did not collect the gst, being in China and all, and that the transaction record clearly showed the gst refund amount coming from eBay Australia and New Zealand pty Ltd. I smell a rat in all this inconsistency.