E582: B.C. Is Taxing Sellers On Nearly All Of Your Fees

Jan 13, 2025

David McCormick, an expert in e-commerce taxation, sheds light on the murky waters of tax law in British Columbia. He explains how the province's Online Marketplace Services Act imposes Provincial Sales Tax on Amazon fees, not just sales, creating unexpected burdens for sellers. McCormick discusses the difficulties in reclaiming overpaid taxes and the convoluted refund process that many face. He also highlights the implications for small businesses navigating this complex landscape, urging for better advocacy and understanding of digital tax laws.

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Intro

00:00 • 3min

Exploring E-Commerce Insights and Digital Tax Implications

02:37 • 2min

Understanding the Online Marketplace Services Act and Its Impact on E-commerce

04:22 • 4min

Navigating PST Challenges on Amazon

07:53 • 22min

Navigating Provincial Sales Tax Challenges

29:50 • 8min

Navigating Tax Refunds and Appeals in British Columbia

38:03 • 3min

Dave interviews David McCormick from Legacy Lawyers to talk about e-commerce taxation in B.C., Canada, specifically regarding the Online Marketplace Services Act, the Ministry of Finance's choice to start charging Provincial Sales Tax (PST) to every B.C. based seller on each of Amazon's seller fees, and why this choice is ultimately flawed.

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E-commerce taxation is a huge mess in British Columbia right now. If you're not from the great white north, then you should know that Amazon has been charging sellers PST since 2021 – something that Amazon wasn't exactly required to do. The worst part? They've been charging this on sellers' global sales—whether those sales occurred in Canada, the United States, or Brunei Darussalam. Because of this, many BC sellers have been paying a minimum of 1% of their sales (and most will be closer to 2% or greater) in provincial sales tax (PST). The Big Takeaway:

Provincial Sales Tax (PST) is being applied to fees paid by sellers, and not just customer orders.
While Amazon has taken a conservative approach to PST collection by overcharging, sellers face challenges in obtaining refunds for overpaid PST. The Ministry of Finance have been very difficult to appeal with even when having a legitimate defense.
This leaves sellers with no choice; and they may need to engage legal help for refund applications.
Political action is necessary to address unfair tax practices.
Sellers should be proactive in communicating with their Members of the Legislative Assembly (MLAs).

Timestamps

00:00 - Introduction to E-commerce Taxation in BC
03:03 - Understanding the Online Marketplace Services Act
06:08 - Impact of PST on E-commerce Sellers
08:55 - Amazon's Approach to PST Collection
12:13 - Navigating Refund Applications and Denials
15:05 - Legal Interpretations and Software Taxation
17:53 - Challenges for Sellers in the Digital Economy
21:13 - Strategies for Sellers to Address Tax Issues
24:04 - Political and Legal Actions for Change
26:51 - Conclusion and Recommendations for Sellers

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Thanks for listening!

Until next time, happy selling!