The Canada Revenue Agency Audits E-bay Sellers

If you are selling products on E-bay, these earnings are likely subject to income tax

. If you sell more than $30,000 worth of goods per/year you may also be required to collect and remit sales tax.

Last year, Ebay Canada received a court authorized requirement from the Canada Revenue Agency. Ebay must now release the account information and sales data of Canadian Ebay members that meet the following conditions:

Sales of more than $20,000 and at least 24 sales transactions in any of the calendar years 2006, 2007 or 2008, (irrespective of membership in Ebays Power Seller program); OR

Sales of more than $100,000 in any of the calendar years 2006, 2007 and or 2008, regardless of the number of sales transactions.

Ebay is required to supply the CRA with information about these individuals that includes their full name, user id, mailing address, billing address, telephone number, fax number, email address, and the selling price of each item that was sold.

This has resulted in an increase of audits by the CRA. When the CRA receives the information from Ebay and compares it against the sellers returns, they will note any discrepancies and usually will begin an investigation that will lead into a full blown audit.

If this is you, the CRA will eventually find out about your income and you will be subject to interest and penalties. If you have been contacted by a CRA auditor, regard same as serious and seek professional counsel immediately. We routinely represent Ebay Sellers who are being audited by the CRA. We organize audits to take place at our office (not our clients home or business) and protect our clients interests every step of the way.

If the CRA has not commenced an audit against you, an excellent way to disclose your income and avoid penalties and prosecution, is by making an application under the voluntary disclosure program. This is another process that you should not pursue unrepresented. This is a program that allows you to voluntarily disclose previously undisclosed income to the CRA and avoid penalties and criminal prosecution. It is an involved and complex process but if you qualify, will be well worth it in the long run.

It is important that if you are selling goods on Ebay, that you declare the income to the CRA on each and every tax return and if you havent, seek help as soon as possible. For more information about tax audits and the voluntary disclosure program visit www.fightbacktoday.ca.

by: Mark Feldstein, CA, Mark Feldstein and Associates

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