The Taxman Cometh

[Bushmiller]

A small disclaimer to start off with and it is that there is a woodwork connection here, but it is not the primary thrust of the thread so with that out of the way, I will continue. We have all been made aware recently of the Aussie governments efforts to extract their share of goods entering the country with the imposition of GST.

I was a little confused recently when I purchased a saw on US Ebay and at checkout noticed there was an additional component of approximately 10% tax added to both the goods and the shipping. Initially I had thought the GST had struck, but quickly realised that I was shipping to a US address. So that was not the case. I paid anyway and contacted the seller from whom I have bought on several occasions and in fact my previous handsaw purchase was also from him as recently as 4 December (There was no additional tax on that purchase).

These are the order details on Ebay

Lookalike Ebay checkout order.png

This was the good, an unbranded Warranted Superior handsaw with a handle reminiscent of Disston's iconic No.12 saw.

Lookalike saw.jpg

and this was the reply from the seller:

"I really do not know. We did not receive the $3.28. We received $14.50 plus $18.00 shipping for $32.50 minus paypal fees. Sorry I don't have an answer."

As I said, I have dealt with this seller several times over a number of years and I regard him as ethical. Consequently I have no reason to distrust his comments.

So then I contacted Ebay. It is a bit of a hassle to find out exactly how to do this as it is a bit like sauntering through the Hampton Court Maize, but I finally got there and they telephoned me back in less than a minute from my request.I was impressed. I was also amused by the situation I found myself in as an expatriate pome bastard talking from Australia to a bloke in the Philippines about a purchase I made in the US. How cosmopolitan is that?

Anyhow it was all good and the Ebay representative was helpful. After I explained the situation he went off to check. It transpires that this new regulation came in at the beginning of January. He knew no more about it than that. I don't know who collects the tax (apart from Ebay), I don't know what it is for and I don't know if it applies to all states. The Ebay man did think that some goods were exempt (foodstuffs etc), but apologised that he did not know any more.

For the unwary it is a demonstration of how an overseas purchase can blow out. I thought I had made one of my cheaper purchases at $14.50. Add in US shipping, tax and another $10 shipping (it's share of a bulk delivery back to Oz) and the cost is nearly $46. Convert that to A$ and my US$14 saw is now a whopping A$63.87, Ummmm.

Is anybody else familiar with this US tax?

Regards
Paul

[Fuzzie]

I'd guess you bought something while you are in Australia. The tax man would say that is goods and services provided to an Australian in Australia irrespective of using an intermediate shipping address. You also apparently paid for it from Australia, making it even more likely to be subject to GST. I also guess ebay adds its own % (3c) to the 10% gst calculated to pay for its collection costs?

[FenceFurniture]

About 12 months ago there was discussion in the USA about how all the various State taxes were going to be actually imposed from a certain point going forward. The law has always apparently been there but not exercised apparently. It's all to do with shipping from State A to State B and taxes never used to be collected even though they were supposed to be. It would seem to have been a loophole for many years and decades.

Perhaps the time has come?

There are some States that don't have sales tax, Oregon being one. Others have up to 10%. It must be a bureaucratic nightmare!

Lee Valley explained to me how it used to be a few years ago:
If purchased in a State where they have a shop or presence (meaning an office) then sales tax will be applied at the rate of the receiving state (I think it's the receiving state). If there is no presence in the state they are being shipped to then there was no tax applied. So when I purchased from them it was booked out of their NY shop as I recall, but I was shipping to CA so no tax.

However, if I was to use ShopAndShip (no consolidating, remember) which is NY based, then there would be NY State Tax applied, which is getting up towards 10%.

Clear as the Menindee Lakes?

[ian]

Further to what FenceF advised

around April or May last year the US Supreme Court changed the rules regarding the collection of US sales taxes -- which vary by state and county and city.
The additional tax Bushmiller is seeing will be a result of that rule change. Prior to the rule change the person receiving the goods as a result of an interstate transaction was responsible for calculating and forwarding the sales tax owed on the item.
After the rule change it's the person selling the goods who is responsible for collecting and forwarding the sales tax to the tax authorities in the customer's state. For Aussies, using a drop shipper will count as being a customer resident in the drop shipper's state.
I'd guess the new rule came into effect on 1 January, and eBay is being "helpful".

Imposition of US state sales tax as well as Australia's GST will make some overseas purchases more interesting -- I don't know what the US sales tax and Australian GST rules are regarding antiques, i.e. tools more than 100 years old.

[Bushmiller]

Thanks Franklin, Brett and Ian.

This all fits in, but is still incredibly murky. I went searching through Ebay to see if there was any advanced warning that this would happen, but this reference below was the only vague reference I could find with a quick glance. It doesn't really say that anything happened.

https://www.ebayinc.com/stories/news...ll-businesses/

The alarming aspect is that it was apparently introduced without warning either to buyers or sellers.

Regards
Paul

[TermiMonster]

I bought something from England a cpl of weeks age. I also got hit with a tax:

Subtotal	AU $15.66
Postage AU$19.29
Import charges	AU $7.73

Total: $42.69

A significant amount more than the GST, even with postage included.
TM

[FenceFurniture]

This all fits in, but is still incredibly murky.

Pfffft!

It's a tax system.

You expected, what, exactly?


I have no doubt there will be much discussion on Sawmill Creek, so I'll have a squiz.

[FenceFurniture]

No talk at all on SMC, but here is the old thread.
https://sawmillcreek.org/showthread....tax-collection

[ian]

I bought something from England a cpl of weeks age. I also got hit with a tax:

Subtotal	AU $15.66
Postage AU$19.29
Import charges	AU $7.73

Total: $42.69

A significant amount more than the GST, even with postage included.
TM

without doing the sums that looks like 21% "tax"
I suspect the seller has applied the UK VAT rate rather than Australia's GST rate -- it will be worth an email

[Bushmiller]

There was a time when goods exported from the UK were free of VAT. Perhaps that has changed. VAT is 20%.

Regards
Paul

[Simplicity]

[QUOTE=FenceFurniture;2123233]Pfffft!

It's a tax system.

You expected, what, exactly?






It’s Tax
It’s like death, it’s going to happen weather you like it or not.

What’s really interesting we’re all recovering from the Xmas new year hangover, perfect time for the ATO to slip a new tax in while we’re not watching.

Cheers Matt.

[AlexS]

Clear as the Menindee Lakes?

And much deeper.

[Bushmiller]

This may be some more information:

https://dor.wa.gov/find-taxes-rates/...e-facilitators

Washington state is in the Market facilitators group. But is there a Catch 22 in play:

https://www.ebay.com/help/buying/pay...chases?id=4771

Doesn't really matter which state you are in.

I suspect no tax should have been charged in my instance as I think the seller is under the $10000/ 199 items threshold into Washington state. Did Ebay charge anyway and if so where did the money go? I am I being a little cynical here?

Regards
Paul

[ian]

This may be some more information:

https://dor.wa.gov/find-taxes-rates/...e-facilitators

Washington state is in the Market facilitators group. But is there a Catch 22 in play:

https://www.ebay.com/help/buying/pay...chases?id=4771

Doesn't really matter which state you are in.

I suspect no tax should have been charged in my instance as I think the seller is under the $10000/ 199 items threshold into Washington state. Did Ebay charge anyway and if so where did the money go? I am I being a little cynical here?

Regards
Paul

I think what's happened is that eBay has been caught by the tax rules and not your seller.
Text in your first link captures eBay as the "market facilitator" -- eBay would probably exceed the "no need to bother" threshold every hour or so.

[rob streeper]

Paul,

The tax situation here is bizarre. After a while you learn how to work it.

In Texas on-line sales are officially taxed at the rate where the purchaser lives, but in reality they rarely are. Internet purchases are a free for all.

Amazon sales, if you by something sold and stocked by Amazon, are taxed. If you buy via Amazon a product that is not stocked and sold by Amazon the purchase is usually tax free.

In addition, there is the grey economy, Texas has an enormous gray economy. You can buy practically anything in the gray economy tax free.

Then there are business taxes. Business taxes in the US are very favorable. For instance, if you buy tools and use them in your business you pay no tax on the money you spend for them up to a certain dollar amount as a deduction against income.

If you do research you get the research tax credit, which is different. The RTC is a credit against taxes owed, not a deduction. To pose a hypothetical. Say Jorge has a saw business. Jorge can use the RTC to buy saws for 'research purchases' like hardness testing surveys and such to offset his business income. Balanced correctly this is a way to make tax free money.

Being in business is the way to make money in the US. Working for a living is a losing proposition, i.e. for suckers.

Thus is explained why the richest country in the world still has citizens that die of hunger.

Regards,
Rob