Netflix tax

[stickerswa]

Just got an email from ebay...

From 1 July 2017, Goods and Services Tax (GST) will apply to fees on eBay.com.au, due to new legislation in Australia (the "Netflix Tax").

Businesses registered for GST will not be affected by this change if you register your Australian Business Number (ABN) with eBay here.

Anyone else feel a fee increase coming to cover this....

[retrogamestoreau]

My business name doesn't fit in the text field..

[brerrabbit585]

They don't need to say what the percentage is! Where GST is charged in Australia it's a flat 10% of the purchase price - in this case the purchase price being whatever fees ebay charge us for their service (being able to sell on their site).

It's NOT the ebay fees PLUS 10%. It's an extra 10% OF the ebay fees.

[healthandstyle]

I believe there are two separate issues at play here;

GST on ebay Final value fees

GST on Goods sold on ebay by overseas based sellers.

I believe it plays out like this.

Example 1

Before 01 July Jim sells his half eaten bag of protein powder for $50.00 on ebay and pays a $5.00 final value fee.  After 01 July the Final value fee will be $5.50 ($5.00 fee plus 10% GST)

Example 2

Mary who has an ABN and is registered for GST sells a dress for $100 ($90.90 + $9.10 GST) and pays a $10.00 final value fee.  After 01 July, the final value fee will be $11.00 ($10.00 + $1.00 GST) which Mary will record in her accounting system and offset against GST collected from her sales in her quarterly BAS.  Mary also has to provide a tax invoice if requested by the customer.

Example 3

Before 01 July Zhu from China Sells a USB Cable on ebay’s AU site for $100.00. Zhu does not have an ABN and is not registered for GST.  From 01 July the price will go up to $110 because ebay will collect the 10% GST on this sale and remit it to the ATO in line with the new legislation.  Zhu will not however pay 10% more on his final value fees as an overseas seller because sales to overseas entities aren’t subject to GST.  However, Zhu can elect to register for GST under the "Simplified GST Reporting System" and notify eBay who will no longer collect the GST on his behalf. Zhu will then have to complete and submit quarterly BAS and pay GST.

[247newdeals]

I heard about this ages ago and even though eBays message is totally confusing I am happy about it the main reason being as I read it the aim is to charge international sellers GST. This should mean that for example, Chiense seller will have to pay an extra 10% in fees so those of us who already pay GST will be able to be more competitive and hopefully, keep more sales and therefore more money in Australia. I am hoping this is how it will work but like other still, a bit confused at this point

[healthandstyle]

I'm sure the overseas sellers will find a way around it - but at the end of the day, the legislation requires eBay to take the responsiblity for GST compliance, so they will need to make sure all the loopholes are closed.

[franklet]

The tax is on digital items, downloaded stuff. It says on the page that goods are not taxed.

[ozstockman]

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@lyndal1838 wrote:

Even if a seller cannot claim their GST back on their BAS it is still a claimable expense of doing business and can be claimed on their tax return.

Sellers who are not registered for GST and/or do not have an ABN will just claim it as an expense.

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eBay  won't be allowed to include GST into  their fees to  a business seller so there will be nothing to claim for us. I believe it is quate clear in the quote I have taken from APH website and posted above.

Whether it will apply to just any business  or only for those that are registered for GST it is not so clear from that page. However it now makes sense to me why ebay is asking to provide ABN. As I suggested above ebay will be exempt from adding GST to their ebay fees in the case of business to business service and   "excempt status" is more relevent to ebay not business sellers. 

Digital here means ebay service to us-sellers and not what we are selling to our customers.

[ozstockman]

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@healthandstyle wrote:

Example 2

Mary who has an ABN and is registered for GST sells a dress for $100 ($90.90 + $9.10 GST) and pays a $10.00 final value fee.  After 01 July, the final value fee will be $11.00 ($10.00 + $1.00 GST) which Mary will record in her accounting system and offset against GST collected from her sales in her quarterly BAS.  Mary also has to provide a tax invoice if requested by the customer.

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I believe this one is wrong Mary will pay the same fee as eBay will be exempt from charging Mary GST with their fees based on "business to bisness will be exempt"  Ebay will charge GST only those who have not provided them their ABN or all private sellers.

[healthandstyle]

No, the word "Exempt" is misleading.  From 01 July noboby is exempt from paying GST on ebay fees except for those invoiced to sellers based overseas.  Mary, being an Australian business with an ABN who is registered for GST can claim the GST on eBay fees as a credit on her BAS, whereas she wasn't able to in the past because eBay's final value fee invoices came from a Swiss company where no GST was applicable.  

Therefore for sellers who are ABN holders and who are registered for GST, there will be no net overall increase in costs.  Casual sellers will see 10% more on their final value fees (example 1), and we assume that ebay will increase the sale price for items sold by overseas sellers to AU customers by 10% to collect the GST on their behalf.

Ebay Final value fees = digital goods therefore is a taxable item.

[digital*ghost]

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@247newdeals wrote:

I heard about this ages ago and even though eBays message is totally confusing I am happy about it the main reason being as I read it the aim is to charge international sellers GST. This should mean that for example, Chiense seller will have to pay an extra 10% in fees so those of us who already pay GST will be able to be more competitive and hopefully, keep more sales and therefore more money in Australia. I am hoping this is how it will work but like other still, a bit confused at this point

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GST is a tax on Australian consumers - it increases prices, but that money is (theoretically) never seen or ultimately paid by sellers who have to collect GST for the Government. Only the end consumer pays this tax.

That is why sales to overseas customers can't include GST, because the Australian government can not tax international consumers, so overseas sellers will not have to pay this tax. 

If the buyer of eBay's service is a business, and they are also registered to collect GST, they may (or may not) have GST added to their invoices, depending on how eBay handle this.

From the post earlier, it seems likely that eBay will register for the simplified version, meaning anyone who provides their ABN to eBay and verified as registered to collect GST, won't have GST added to their invoice. As in, eBay will only charge GST to end consumers, which everyone who is not registered to collect GST is classified as. If eBay purchased goods and / or services in Australia in order to operate here, they would be paying GST on those goods and services - if they register for the simplified version they won't be able to claim that back in credits when they hand over whatever they have collected from sellers to the government.  

If they go the other way so that they can claim credits on any GST they have paid, they would have to add GST to all invoices and let the sellers sort it out themselves, but then there would be no point in asking people to supply their ABNs if that was their intention.