Is it personal income or business income?

[biglittleape]

Say you have a regular job where you get a T4 from your employer and on the side you sell on eBay.

Is the eBay income considered business income and taxed separately and with business tax rate or are the profits from eBay sales just added to the same "pool" as your regular day job and taxed together potentially moving you to a higher tax bracket.

[msmaggie060]

You are taxed at the personal rate for all personal income regardless of the source but you need to track your ebay income and expenses separately. Business tax rates are for corporations. Don't forget you can deduct a lot of  your expenses which will bring down the amount you have to declare. Look up the CRA guide for income earned from a business.

[biglittleape]

Ah ok 😞

[doc_scribe]

Just download a t2125 Statement of Business or Professional Activities form from the Government of Canada site...along with your yearly Tax Package.

[kawartha-ephemera]

Net income reported on a t2125 is considered CPP pensionable income. The maximum pensionable income amount for 2021 is $64,900. Should the pensionable amount reported on your t4 be less than $64,900 then a CPP contribution will probably be required. Self-employment income contributions are double the rate paid on regular employment income.

[ilikehockeyjerseys]

I am not an accountant, so this isn't accounting advice, it is just my personal experience. It sounds like you should consult with an accountant. 

If you are running an eBay store with a reasonable expectation of profit, and you are not incorporated, it would fall under self employment income. Self employment income is reported on your income tax under a different section as the income on your regular T4. Both employment and self employment income combine to make your total income. Meaning, if you made 50k at work, and a 50k profit on eBay, your total income is 100k. As others have mentioned, you get dinged by having to pay the employer's portion of your CPP on any self employment income. 

Here is a simple income tax calculator which you can use for a quick reference. Keep in mind, it is only a quick reference, and your actual taxes may vary: https://turbotax.intuit.ca/tax-resources/canada-income-tax-calculator.jsp

[recped]

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@biglittleape wrote:

Say you have a regular job where you get a T4 from your employer and on the side you sell on eBay.

Is the eBay income considered business income and taxed separately and with business tax rate or are the profits from eBay sales just added to the same "pool" as your regular day job and taxed together potentially moving you to a higher tax bracket.

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It would be if you incorporate but probably safe to assume you are operating as a sole proprietorship (registered as such or not). In that case you would be reporting gross and net business income on your PERSONAL tax return using Form T2125.

https://www.canada.ca/en/revenue-agency/services/tax/businesses/small-businesses-self-employed-incom...

https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t2125.html

[doc_scribe]

The OP's comment  "on the side you sell on eBay" suggested this was simply about reporting some additional self employment income on a personal tax return.  Certainly not meant to imply one size fits all business models. So thank you for that clarification

[mcrlmn]

Is your eBay income $10K, $20K, $30K?

If you're clearing chump change, there's no reason to ever consider filing.

[biglittleape]

Not chump change.  One issue is 95% of my sales are international so there's very little chargable HST.  I'm a little concernted it will throw a red flag for CRA and I'll get audited.  Has anyone dealt with something like that before?

[ricarmic]

It is not clear to me if you are already registered for a business or not.

Charging HST is based on total sales everywhere in the world (over $30,000 $C).

If you are a registered business, yes it is quite possible they'll follow up with you, as long as you have documentation behind your sales, there's a wee audit page you fill out when they re-assess you, if they do. I'm well aware of this as I just mailed one away a couple days ago. About every 5 or so years they send me a re-assessment, my ratio isn't as great as yours I'm only 50% international but it's still enough to catch attention.

If you aren't a registered business, as others have suggested, it would be a very good idea to consult with an accountant, it could be the best $$$ you've ever spent....

[biglittleape]

Yes I have a business and hst number.

What kind of proof do they require that your sales are international?  I looked at eBay Performance Reports and I don't see anywhere to view sales by country.

[ricarmic]

For the re-assessement, in my past experience all you have to be able to do is advise how much sales were to HST provinces, non HST provinces and international (I've not yet heard back of course from the one I just mailed). Remember that this is simply a form one fills out, it is not an audit.

As I understand it if there's an audit, you'll need to be able to provide/prove the shipping addresses, in my case I produce receipts for the customers which has all that on it (I believe one has to provide a receipt with HST/GST number to all Canadian sales so some form of receipt is required), so I haven't gone searching for where one might find addresses in eBayland. Others may have better advice regarding that.

[biglittleape]

Thanks.

I'm a little surprised how little information the performance/sales reports section on eBay provides.  I fully expected there to be a report of sales by country that you could drill down into.  Do eBay store subscribers, I'm not, get better reporting or something, this seems very limited.

[biglittleape]

OK found more details including destination country under Orders section.  It's not visible on the page, you have to download the report which includes a lot of details.  Would be nice if there was a page where you can filter things and not just all inclusive spreadsheet download.