Jean Pierre Blackburn, Canada’s Minister of National Revenue, has advised Canadians that the income they earn online is taxable. He emphasized that the rules that apply to traditional commerce apply in the same way to electronic commerce, such as the use of eBay.
eBay Canada has provided the Canada Revenue Agency (CRA) with the names and account information of eBay sellers, together with their merchandise sales records, as the result of a Federal Court of Canada decision. After eBay lost an appeal in November 2008 (on a case that had been going for two years), the CRA were entitled to receive information for people who were high-volume traders (“PowerSellers”) at any time during 2004 and 2005.
The CRA will be able to match the information provided by eBay to the records it already holds, to detect whether eBay traders have filed all the required returns and correctly declared their total business income. If the CRA determines that an individual or a business did not comply with the tax laws, it was confirmed that the CRA will take any necessary action, including, if necessary, in-depth audits.
"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," said Jean-Pierre Blackburn. "To avoid paying these fines and penalties, taxpayers who have failed to file income tax returns for past years or who have not reported all their income can voluntarily correct their tax situation," he added.
It has been promised that taxpayers who take the initiative to correct or disclose any information will not be penalized or prosecuted, as long as they make a full disclosure before the CRA starts any audit or other compliance action. The CRA expects that the audits, based on the information received from eBay, will begin at the end of summer this year.
A comprehensive report in our Intelligence Report series examining the new possibilities that offshore e-commerce open up for business, and analysing the offshore jurisdictions that have led the way in offering professional e-commerce regimes for international business, with a particular focus on e-gaming, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report6.asp
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