Good News: Canadian Taxman Goes After Evil eBayers – Editorial

With the Government of Canada’s recent threat to clamp down on people selling goods through eBay, little do they know the big can of whoop-ass that they have opened.

OTTAWA – The federal government says online income is taxable and has warned Internet entrepreneurs who use eBay and other web-based sales venues that they must pay up or face prosecution.

“Taxpayers should know that the tax laws that apply to traditional commerce apply in the same way to electronic commerce, like eBay selling,” Revenue Minister Jean-Pierre Blackburn said in a statement Thursday. “I strongly encourage eBay sellers and, for that matter, any taxpayer who has not already done so, to correct their tax affairs as soon as possible to avoid penalties or prosecution.”

The tax agency says it will begin auditing eBay sellers at summer’s end after receiving detailed information from the online sales outlet. In a September 2007 decision, the Federal Court of Canada ordered eBay Canada Inc. to provide the Canada Revenue Agency with the names of its high-volume sellers, their contact information and their sales records.

Noting that its records are kept outside the country by its parent company, eBay appealed the decision. The appeal was rejected in April.

The tax man can now use personal information to determine if the sellers have duly reported their online income.

“If the CRA determines that an individual or a business did not comply with the tax laws, the CRA will take any necessary action,” warns the release from Revenue Canada.

With their vague ‘high volume sellers’ list, in an effort to chase tax revenue, they may end up throwing money out the window.  Why? Because now everyone who sells anything on eBay can claim the cost of goods sold, eBay fees, and PayPal fees. Also do not forget the cost to list, monitor, package, and ship the order, the cost of your computer, internet connection, printer ink, electricity, office space, phone bill, and mileage.

So starting to get the picture? The next time you sell anything on eBay remember to claim your income but make sure to take all of your deductions too. If you are lucky enough to be selling something used, chances are it will sell for less than what you paid for it. If you had not written it off or amortized it over time, then you can show your cost of goods sold being greater than the selling price. Couple that with all of the deductions and you will show a loss. Do this enough times with your junk and you may be able to reduce your taxes to zero!

So the next time you are thinking to throw something out, list it on eBay for $1.00 and stick it to the taxman!

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