taxing powerseller

[watch-n-save]

Hi everyone, anyone has any update regarding the tax thing against powerseller? Are the government still looking for us? Will hiding your powerseller status be a good idea? Will it help? And where do I go to hide my powerseller icon? Please help out!

[fatdane]

If you are self employed you have a good chance of being audited regardless of what you do on Ebay. If most of your income is from a job and you report your Ebay income you have less of a chance of being audited unless your Ebay income greatly exceeds your "real job" income.

One power seller was recently audited, and ended up not paying any additional tax. The gentleman probably has his books set up better than most of us, but he estimated that his auditor spent over 90 hours going over his books. Tax people do not like spending a lot of time and producing no return to the Government.

If you do "get lucky" and have Canada Revenue pick you for an audit don't panic. The auditor will probably start by asking some questions about your business, especially if they have no functional knowledge of Ebay. If, however, they don't ask a question, don't answer or start babbling.They may then closely examine your records for a single month. If they see lots of dubious deductions and a poor record of tracking sales they may hang around and go through everything, but if they see that they can not make any money for the Government they probably will leave. The Tax people may not admit it, but the rumour mill sometimes can give a figure for the $ they are expected to produce for each hour of auditing - if they can't get it out of your hide they move on to try again on some other "lucky" soul

[treasure-pot]

Have a read of this thread - it's short and to the point.

http://forums.ebay.ca/thread.jspa?threadID=600025448&tstart=0&mod=1191461261084

Focus in on the last sentence:

In the meantime, please remember that you are responsible for ensuring that you are in compliance with all local laws and regulations relating to your activities online. We will keep you updated on the progress of this matter as we learn more.

Based on what you sell and the value, I would urge you to consider getting your house in order. "Are the government still looking for us?" Probably some more than others.

Hiding your Powerseller status icon would not help as the gist of the court decision is that the CRA now has access to the sales records of those who qualified for the program. It won't matter to them whether you display the icon.

Bill
treasure-pot

Co-Author of

[sageleafkids]

The case was an application by eBay to refuse a warrant served on them. Canada Revenue Agency was looking for the following items:

... information and documents for any person having a Canadian address according to your records (including individual, corporation and joint venture) who qualified for the PowerSeller status under eBay’s PowerSeller program in Canada at any time during the two calendar years 2004 and 2005....



Here is the url to the full text of the decision on the Federal Court Website:

http://decisions.fct-cf.gc.ca/en/2007/2007fc930/2007fc930.html

eBay Canada's argument did not make a lot of sense. They tried to argue that they did not have access to these records... The judge agreed with the Canada Revenue Agency, and as such, eBay was required to provide the documents as required in the warrant.

Turning off your Powerseller icon will not affect whether or not you "qualify" for the program.

Peter

[coxengines]

Both of us never really having held a job, we get audited about every 2-3 years for income Tax, about the same for PST and about once a year for GST.

Really minor stuff aside, the auditors usually end up using our office space for 2-5 days, drinking our coffee, eating our cookies and generally being nice people.

We actually helped one set up his own business afterwards - funny story.

Auditors are not your enemies but if you are hostile, unaccommodating, hide things or are obviously hiding revenue, then yeah!

Don't fret. It's only bad if you have something to hide LOL!

Xena

[tea_past_times]

Hey sage, would you happen to know then, does this mean that Revenue Canada may get a look at 2004, and 2005 records only, or would this decision then automatically apply to years after that. I've heard it only applies to specifically 2004 and 2005, and even that is still pending Revenue Canada's ability to show some sensible reason why they want all that information.

[tea_past_times]

As I understand the issue, Revenue Canada has NO information, given to them by Ebay, as they have yet to show they are conducting any specific investigations. Until such a time as they do prove they are conducting specific investigations and therefore require the information, everything is the same as it's always been. Except for rampant paranoia in the Ebay Community.

[tea_past_times]

Perhaps it's all just a tempest in a teacup??:-D

[tea_past_times]

In simpler terms: Revenue Canada has the right to information needed for a criminal investigation that is ongoing, but cannot request information, hoping there is a reason to start a criminal investigation.

[tea_past_times]

So if ya ain't already in trouble with taxes, this ruling can't put you in any.

Someone who KNOWS any of this for a fact. Please post. I'm no lawyer for sure.

[sageleafkids]

For most legislation, including that under the Criminal Code, and other similar Acts, for any Warrant or Order to be issued, the Affiant must prove that there are reasonable grounds to believe a specific offence has been committed, and that there are grounds to believe items to prove that offence or located in a certain place, or under the control of an individual or company.

There are provisions under the Income Tax Act that are much different. In November 2006, the Canadian Revenue Agency received an ex parte Order from a Federal Court Judge, ordering eBay to provide all information in relation to PowerSellers. They used Section 231.2 of the Income Tax Act which is incredibly broad, in that the Minister may Order "any" person to provide "any" information to the CRA for the purpose of administering the Income Tax Act.

The Minister may not authorize the release of information in relation to an "unknown" person. However, a Judge may order such information in relation to "unknown" persons, as long as the "group is ascertainable", which is why they have decided to use the term "Powerseller", a group that is certainly ascertainable.

Tea, you are referring to a further argument made by eBay Canada, which stated that the Canada Revenue Agency was conducting a genuine and serious argument. The Judge stated that he would reserve judgement until the Federal Court of Appeal ruled in the case: Canada (MNR) v. Chambre immobilière du Grand Montréal, 2006 FC 1069. That ruling was given on November 2, 2007. The ruling was in French, which I can't read, though I interpreted the final line which said that Canada Revenue Agency won the appeal.

The judge in the eBay case said that he would rule within 90 days of the September 13 eBay ruling, or within 60 days of the Court of Appeal ruling, unless counsel abandoned their argument. It appears as though there has been no further rulings, so I presume that eBay Canada has abandoned their argument.

To answer your question Tea, this ruling only affirmed the Court Order requesting the 2004 and 2005 documents. I would presume that the CRA would review these documents prior to seeking a further order for 2006 and 2007.

Just my thoughts...

Peter

[tea_past_times]

Nice chatting with you Peter. Come back often. So nice to see a useful and informative discussion on these boards!