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Home : Top Stories : eBay to report 'power sellers' to revenue agency

eBay to report 'power sellers' to revenue agency

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CTV.ca News Staff

Date: Mon. Nov. 17 2008 6:43 PM ET

Canadians who auction their goods on eBay can now expect to have their personal information released to the Canada Revenue Agency.

The online auction site has sent a letter to affected customers telling them the law now requires it to send the tax agency the names and gross sales figures of so-called "power sellers." These are eBay sellers who make more than US$1,000 a month in sales over three consecutive months on the site.

"While eBay strenuously objects to these requests made by the CRA, we are obliged to comply with the legal ruling," the company said in the letter.

The company is following a ruling by the Federal Court of Appeal last April, which upheld a lower court decision ordering the company to release personal information about their users' sales activities.

Over the past few days, sellers have been posting queries about their tax obligations on the forums section of eBay's website. Several sellers have gone on the site to say they're extremely upset that the CRA is trying to take a tax bite out of the money they get for their old clothes or used goods.

Many said they didn't understand why they should pay taxes again on items that were already taxed when they were originally bought.

"That's just nuts," exclaimed one seller on the site.

"Don't they (the CRA) have bigger fish that they can fry without putting someone through all that twice!?"

But not everyone appeared to be against the CRA's focus on eBay.

"I do not mind at all (that the CRA is) auditing taxpayers, even if I am the target from time to time. That is the only way to keep the system honest," wrote one online merchant.

The Canada Revenue Agency would not speak specifically about the case with CTV.ca, citing confidentiality provisions. But it said tax laws that apply to traditional commerce apply equally to electronic commerce.

An individual is "responsible for reporting income from all sources to avoid penalties," CRA spokesperson Catherine Jolicoeur told CTV.ca on Monday.

With files from The Canadian Press

Comments are now closed for this story

Sherry
said

If a person sells new stuff then I suppose it should be taxed like all other businesses but to tax used items is a joke. Why would you pay tax on something twice or more. Beware .. the taxwoman cometh!


dan
said

We have to pay tax on the sale of a used car too. That is just as stupid. The bloody liberal mentality in this country has to end. ENOUGH TAXES!!!!


Fred in Cobden
said

Well it's only fair that people whose business is selling used items on eBay pay the same tax as someone whose business is selling used items out of their home business.

I sell antiques out of my garage and I pay income tax on the profits (and claim expenses). Now this puts eBay power sellers on a more equal footing.

Now of means us legit taxpayers will share a little less of the burden.


Dennis K
said

How many times do we have to pay TAX on the same item? E-bay is a great place to shop, it's too bay the taxperson is always wanting to get into your pants (pocket) just to stick it to you anyway they can. We already pay enough tax, tax freedom day, have we reached it yet, I don't think so, still have to pay tax after your dead.


theresa
said

I don't think they are targeting those who sell a few used items here and there, but those who do it for a living- earning more than $1000 a month (as the article says). They run stores, sell a lot of merchandise and don't declare income? I don't want to support them by paying for their health care and other services! I am on Revenue Canada's side on this one.


Max
said

It is about time. We run an legitimate online business and ALL income is declared.

Very few eBay sellers are disposing of a few personal items. The majority are running a business and should be taxed as such. Millions of $ are being defrauded in income tax, GST/HST and provincial taxes.

If you want to play with the big boys, play fair.


Sylvain
said

WOW "Dan" what liberal mentality if you did not notice whe had an election and the Conservative are in power!!!!!!


Former eBayer
said

People who are just clearing out some stuff from their basement are not making $1,000 per month for 3 straight months as the article states. These are people who are doing this as a business, just like if you set up a store selling 'previously enjoyed' items. Income is income, you take your gross, minus your cost and there's your net. Obviously if it's personal stuff then you've probably taken a loss on it if you're just clearing out your basement. The CRA wants people who are doing this as a business to pay their fair share of taxes - which seems fair to me. Why should the guy who sets up a shop have to pay taxes and someone who does it online avoid it?


mike
said

if the Country should give people a chance they already paid stiff taxes when they purchased their items.now pay taxes again on their old items people are trying to make ends meet and the government keep on steping people down look at the economy


Owais Jamali
said

The surprising thing is that although these so called "PowerSelers" dont want to pay taxes on their incomes they still charge full taxes (GST and PST) to the buyers on the full price (including shipping and handling) -- even on as-is or used items.

I bought from some of these sellers in Toronto and all of them have always charged me the full taxes on top of the winning bid. So i think CRA should definately claim these taxes off such sellers.

In my opinion anyone who sells over $ 12000 worth of goods on ebay is not just running a yardsale. its a business and should be taxed.


Cam in Grande Prairie
said

Sooo...they're going after the big fish on Ebay, are they? Or are they going after the single moms, families or simply individuals trying to make ends meet.
Anyhow, my point is that there are many millionaires and billionaires out there that don't pay a single penny in taxes due to ridiculous tax laws the alow them to avoid paying any taxes at all. A family trip to Hawaii...written off as a bussiness expense, a rtreat in the moutains..written off because of bussiness meeting held there,(yeh...right)...all kinds of loopholes too ridiculous to mention!
The CRA would be well advised to go after the "Big Fish" that make the "Big Bucks" and pay little if any taxes on it at all.
Warren Buffet(yes, I know he's American) said it himself...That it was pretty bad when his own secretaries each paid more last year in taxes than he did...and it is sad...very sad!!!
I say leave the little-big fish on Ebay alone...and go after the big fish...with the big bucks!


mickey
said

Hmmm... 3 consecutive months of sales over $1,000. Wouldn't there be ways of getting around this?


Liz Ottawa
said

I think this is fair game for CRA. if they are making a living by doing that, why shouldnt it be declared? otherwise it is making tons of money under the table, which is frowned upon. this is not to target the little guy who is selling one item, it is people who do it as a practice and live off the proceeds. why should we support that? I say go ahead and hound them.


Chris in Oakville
said

The average tax evader has has some very common characteristics. They have children in the public school system, they are heavy users of the medical system (must be guilt), they are ususally recieving some form of Government assistance and they drive nice cars. They intend to pay $ 0 in tax, not because of some noble cause, but out of a sense of parasitical self entitlement. If you use the tax system correctly you will find that in the end you pay a very modest and fair amount of tax. Complaining about paying to much tax means you have not taken time to make it work to your advantage.


RVH
said

Keep your earnings to $999.99 month.


r u kidding?
said

Worse than the Mafia.
No wonder people hate the tax department more than anything.
What they do is just legal extortion.


KB in Ontario
said

Cam in Grand Prairie- I agree there's a problem with the corporate tax system, I can't see this having a huge effect on some of the people you mentioned. For example, there's a single parent with a 3 year old. This parent will be allowed to make $21,200.00 a year before they will be subject to income tax. They will have their basic tax exemption, the equivalent to spouse exemption, and their children amount which would look like this: $9600.00 + $9600.00 + $2000.00.

I'm not suggesting that $21,200.00 is a lot of money, and that it's easy to make ends meet with it but when you look at the possibility of making around $12,000.00/year on eBay, you have to remember the expenses. How much did that item cost, what did your shipping materials cost, what fees are e-bay and PayPal charging you, how much was your computer and printer, and how much you internet costs. Chances are that when it's all said and done, there won't be nearly as much income.

If people are making way more than this then they should be held accountable for the income tax just like any other self-employed individual. Just a thought...



Albert in NB
said

I don't know the extent of the eBay system that requires people to register and sell. But couldn't a person avoid being taxed by opening multiple accounts and keeping each one below 1000? Is that possible?


Brad B
said

I've been paying taxes for decades.

Glad to see that CRA is finally catching up to the 90's and is trying to get ahold of those people who've been evading taxation, but still generating an income on E-Pay.

Fair's fair. I paid over $18,000 in taxes last year, time for some of these people to pay their share too.


Shan
said

Wake up guys - power sellers are businesses, not old granny selling her 25 year old knitted sweater. As with any second hand business, there are taxes to be paid. Just because you do it online doesn't mean there is no tax. As for taxing used goods, the GST system is an input tax credit system so sellers that purchase something to resell, only have to pay the GST on the difference.

Now if the government could only require ebay to capture serial numbers so that stolen goods could be identified, that would be great for society.


Kris D
said

All these "Powersellers" have to do is state their price and then add (plus tax).

The cost is then paid by the purchaser, just like every other retail transaction.

Problem solved, get back to work.


Tax Evaders finally caught
said

Its about time the Government cracked down on these tax evaders. 1000+ for 3 months straight is a business, like it or not. Pay up like the rest of us!


What a joke!
said

There's nothing to stop e-Bay sellers from creating multiple accounts so that their sales don't set off the flags. In theory, I don't think it would be that difficult to have 10 accounts each selling approx. $500-800 a month. There's ways around this ruling, but for past sales, people could be on the hook.

Next up, watch for CRA raiding garage sales.


Michelle
said

The income taxes collected on an income of $1000.00 a month are hardly worth arguing about. Especially by the time the person claims all their business expenses on that amount. A yearly income of $12000 puts you pretty much at poverty level these days.
It is the guys selling several thousand a month and not declaring it, that the CRA is really concerned about. And they should be!!!!


Ama
said

Well than you should simply be able to come income tax that you are a self employed individual.

So than you could also claim 'business expenses/income' right Revenue Canada?

A portion of your utilities, mortgage, or rent, insurance on your home, telephone/internet usage and if you use your vehicle to deliver items to the post office (gas, insurance)
There is a whole list of business expenses on the CRA website!

I understand if these people own say a warehouse or something and are selling overstock of items and merchandise. But someone who just sells there own used junk out of their house and is making some money here and there......


Robert Brise
said

Dollars and Sense!

When will all you people realize that used stuff has to be taxed, so that we can all contribute to the "big three", Billion Dollar fiascos that the government is, (may) embark on, here's my 2 cents... CRA!


Cara B
said

Oh come on! You can be more creative than that. Sell it all in months 1 & 2; then take every third month off for vacation :) No reporting necessary.


RAE
said

E-Bay is nothing compared to these people who have three or four female dogs who they breed, twice a year. They make more each year on two litters per dog, than I do on a pension per year.


Sid In Montreal
said

It just goes to show that there are only two absolutes in life........death & taxes.

Another absurdity is how Revenu Quebec gets away with adding 7.5% sales tax on top of the TOTAL of the sale price + 5% GST. This goes on every minute of every day on every thing including, but by far not limited to, the hydro bill and it seems that nobody complains about tax on tax.

The bottom line is that the law states that we are to report income FROM ALL sources on our tax return so if EBAY sellers, like anyone else, is not reporting their income, then of course one would reasonably expect the CRA to investigate.

I have no problem with that....but stop the tax on tax scenario. One would think that if the government really wanted to encourage spending, given our current economic slow-down, they would curtail such practices so that consumers would have a few $$ to spend.


Eduardo G. Gil
said

Doing business on-line is doing business...
Taxes are due...Three months at 1000 per
month is substantial. Tax-Evasion is not Tax-Avoidance...Pay-Up or stop.

Good on you Ottawa...


Trent
said

I agree with Ama;

If the Ebay seller is making the kind of money that puts them into the 'powerseller' status and is running it as a legitate business, then they will have enough deductions with Ebay fees, Paypal fees, power, heating, phone, internet fees, mortgage interest, office costs, vehicle costs, shipping...etc...that their net income will be below personal exemption levels and will not pay a penny on taxes.

If the seller happens to clear out their garage and house of unwanted/un-needed items and happens to sell $3000 over 3 months, should they be taxed on the monies raised from those items? No. Why? Because those items would have been sold at a garage sale and we all know that monies raised at garage sales are not reported. And if the CRA wants to tax that kind of thing then it should also allow the deduction of the original cost. Then the seller is running at a loss.

Kris D - a seller can not charge taxes unless the seller is a registered business with CRA and has a GST number. Collection in any other way is illegal.

Yes, a seller can create multiple accounts and try to stay under the wire; however, the email address linked to the Ebay name is what CRA is after. Once the CRA sees that there are multiple accounts and all under the same email address you are still busted. You would need a different email address for each Ebay account. Now is the amount of work required to keep that sort of thing worth the money? I don't thing so seeing as time is money!!

CRA is going to end up spending more tax dollars trying to chase doan and catch up on the non-reporters than what they will collect.


Gilles Lebrun
said

What the CRA is doing is not too different from what the Feds and the Ontario government already do : when you buy a used car you have to pay GST and PST even though these taxes were paid when the vehicule was purchased new. Every time a used car is sold the purchaser has to feed the taxman (woman?)



Gerry McCowan
said

Thats the government for you. on new items I can say yeah but old items you should not have to pay twice. If you are making a living out of this i say yes if not No. But who decides the government


Jeremy
said

I think this is totally reasonable.

Someone selling $1000 in goods for 3 consecutive months is not someone selling old belongings or odds and ends; it's clearly a home business that provides an income, and therefor should pay income tax.


Fair's fair
said

seems many are missing the point - CRA is looking for tax on the income, not on the items sold - I have a paycheque and pay my taxes - if there are people making a living, or part of a living, by using eBay as a business, then they should pay tax on that income like the rest of us - stop whining about having the loophole closed!


Taxpayer in Cornwall,Ontario
said

I know of one couple here in Eastern Ontario that have up to six or seven accounts on Ebay or even more....
They purchase huge amounts of items at bankrupcy sales and wholesale as well as buy up entire households in estate sales etc.
These guys have been making in excess of $120,000 annually for the last five years and are the first to boast that they have never paid a penny in taxes, even though they have recieved thousands in gst and pst.
This is a full business,complete with postage meters and auto envelope stuffing machines,big cube van as well as getting local teens to wrap and sort the dozens of items sent out every day.
A simple check of the money paid out to UPS and Canada Post would reveal the fact that this is not simply a couple selling off a few items they have no use for.
Would be nice to see Rev.Canada go after people like this instead of harrassing the old pesioner who still owes twenty bucks from last year !!!

But that would mean they have to WORK....it's easier to harrass the old guy!



SGS
said

I'm all for it, as it helps the actual ma-and-pa storefronts be more competitive with 'basement' Ebay sellers...


Ken in Victoria
said

As far as I can tell, this has nothing to do with sales tax (as many people seem to imply in their comments). This has to do with income and reporting it on your tax return. It shouldn't matter how you make your income, it should be counted as income on your tax return. I do computer consulting as a night job and I have to report this as income (even though I probably only averge $500 a month), why shouldn't someone regularly making over a $1000 a month do the same?


Laz in Finance
said

Once again, the posts here are so out of order and uneducated. Power sellers are not selling "used items" that they owned before like a garage sale. Power sellers are those that sell 100's to 1000's of items per month on ebay. They are going after people who have set up businesses, IE POWER SELLERS, selling goods, used or not, on Ebay for a profit. If they claimed their income and expenses on their T2124 of their Tax Returns, they have NOTHING to worry about. Those people that haven't claimed their income from selling like a business online, should know that the tax man commith. I had a business on ebay and yes, I claimed it as an income. If you are one of those people that think making money is fine without paying your tax, the tax man commith.... Enjoy.


Mike
said

I don't think someone who has "Powerseller" status is just "a single mom making ends meet" or somebody selling stuff he/she doesn't need anymore ("virtual yardsale")...


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