The whole tax thing is a mess. It is hard enough as a Canadian to understand the sales tax rules... to expect
ebay to understand and then apply them correctly is a reach. For example.
The definition of a PM bullion coin in Canada is 99.5% pure gold or platinum, 99.9% pure if silver... it is classified as a "Financial Instrument" much like stocks or bonds.
In the maritime provinces, Ontario and Quebec, they have aligned their provincial sales tax with the Federal GST into the Harmonized Sales Tax or HST. If a coin has PM bullion composition then it is classed as exempt from GST/HST and the application of exempt status is consistent. In BC, however, we have separate Provincial Sales Tax (PST) which also doesn't apply to PM bullion coins though there is a caveat... If it is a collector coin, regardless of the composition, it gets PST applied. The difference between collector coin and bullion coin is loosely related to the premium you pay over spot price for the PM.
So if you buy a SML Ounce for bullion value $35CDN +/- there is no GST or PST. If, however you buy a
RCM "Collector" Silver Ounce for $99, there is PST but no GST applied. Now the actual Spot price for Silver is approx $26 CDN so the difference between the market price of a SML $35 - $26 is considered as dealer spread and also non-taxable... but at what point does that number change to be considered a collectible premium and not spread, the provincial taxation bulletin states "unless obtained for a purchase price greater than the market value".
As everyone knows, there are SMLs with certain privy marks that can command a price of over $100 whereas there are Proof ounces from the
RCM that retail for close to bullion due to market devaluation. It is difficult enough to determine when PST gets applied... For
ebay to get it right is asking more than I think they are capable of managing. For this reason,
ebay is dead to me now; it was on life support for a long time due to their cavalier attitude to fakes and ease of purchaser fraud but this is the limit...
I am a collector, not a dealer at any scale, and any sale I would make privately would not trigger sales tax since my sales volume is trivial->non existent. Given fees, tax discounts and the risk of fraud, all of my coin sales as I refresh my collection goes through a LCS... I am not sure that I lose that much if anything on a transaction. I use
ebay now only for those with storefronts for items I compare with
Amazon or other online retailers... the concept of a home based business/amateur using
ebay as a sales channel is a relic of history.
For an arcane Canadian tax situation... The way GST/HST works is that every transaction along the chain is taxed vs. end point taxation like most US Sales taxes or Provincial taxes. So GST gets charged on B2B transactions. Example... If a retail gold dealer and buys "scrap" gold from old jewellery, it will typically not be at 99.5%. He then sends it to a refiner who returns the same gold at 99.5% or better and charges a refining fee. You would assume that the only tax applicable would be the GST/HST on the refining fee but there are cases where the CRA has deemed the transfer of the gold to the refiner as a sale since the product sent is not the same as the product returned... So the dealer is deemed to have sold non-bullion gold to the refiner and as such GST/HST needs to be applied. The refiner is then deemed to have sold the bullion gold back to the dealer where GST/HST does not apply to the gold but does to the refining fee since that would be a line item on the invoice. Now assuming that the deemed value of the "scrap" is the same as the bullion (weight will be less as the alloyed materials will be removed), the dealer is on the hook for the GST/HST applicable to the value of the gold... 5% GST due would be around $110 per ounce... 13% HST would be around $300 per ounce. This process interpretation has occurred during GST tax audits resulting in penalties and fines to the dealer who is accused of under reporting tax.
First Page
Posted 08/11/2022 10:58 am
