Taxes & CRA

[jules7970]

Need help regarding income earned & CRA. 

I have US registered Ebay & Paypal accounts but am a Canadian resident / citizen. I made over $30k CAD in gross income in 2020.  Since I'm not a US resident or citizen, I'm able to file a W-8ben form in lieu of a 1099K for the IRS. However, I need some help on what to do for the CRA.

All of the items sold were personal items and 99% of my buyers are in the US.  I didn't get a GST/ HST number in 2020 because I didn't expect the sales to exceed $30k.  Sales were entirely due to the lockdown so I don't expect that $30k threshold to be achieved in 2021.  CRA told me that I needed to get a GST # since the $30k was made during 4 consecutive quarters.

Just to give you an idea, here is a quick recap:

Gross sales: $31,000

Fees:
shipping cost: $3,000
ebay: $2500

paypal fee: $1,500
Shipping materials (envelopes, bubble wraps, and etc) $500

transportation: $300

inventory loss: $150

office space etc: $500

So, the net income comes to more like $15,000 or less. 

Regarding Cost of goods sold: this is my own inventory which i've held onto for many years, so what should i put? I've made no additions to the inventory in over 3-5 years.  Do I still have to report this income? If so, where do i report the income & where do i list the expenses? 

I've never filed ebay income before so please bear with me. 

[valuestore]

Allot of the numbers your quoting are used for income tax, wont be used for submitting  gst/hst.  It will all make sense once you dig in. If you dont have one get a business number(which will also be your gst# BN-RT), once thats done log into cra  individual account add business #(sole proprieter), it will link your sin to your business.  Once thats done, log into cra 'my business account'. There find all mailing corrispondance, any pending or overdue gst filings (if any)..  Its a simple form for GST, its not the same as income tax. .  Might want to call the CRA to confirm a start date.  GST is just gross all sales(31K),  zero rated sales (non canada sales),  gst/hst that you should have collected on those Canada sales..  lastly ITC credits (gst/hst paid on supplies).. GL.  

[cumos55]

The total for GST/HST collection registration is $30,000  and is the total for ... 

sales plus shipping cost.

A buyer pays a seller for item price plus shipping cost....  and then the seller pays for shipping cost

[ilikehockeyjerseys]

You should probably consult an actual accountant because it sounds like a more complex situation than someone who is purely selling to make a profit. Keep in mind, I'm not an accountant, so anything below isn't actual accounting advice and is really just my experience with registering for GST/HST myself. 

I understand you say it was personal sales. But based on your situation, if you were engaging in business activities with a reasonable expectation of profit, registering for HST/GST would be a no brainer. Because your sales are almost entirely to the US, you would be able to claim a refund on items related to your business (shipping supplies, eBay fees, etc), while not having to collect HST/GST from 99 percent of your customers, because they don't reside in Canada.

The thing I don't know is how the CRA would view your personal sales. Whether it would be illegal for you to register for HST/GST if there wasn't a reasonable expectation of profit, or whether they'd assume 30k+ of sales is very unlikely to be personal sales, and would have expected you to register for HST/GST unless you have a wide range of proof that this is just stuff that was sitting around your house. Again, I am not an accountant, so in your shoes those are the kind of questions I'd have. 

In a situation where you were engaging in business sales, the simple version of it is that you are required to register when your total sales reach 30,000. Not your profit, any money that is collected. So if you sell an item for 20+10 shipping, that counts as 30 towards the 30,000 threshold. 

[jules7970]

ok, got it that i should get a business # but what if i don't have a $ for cost of goods sold since they were initially bought or given for personal use.  they were accumulated over a number of years. 

[valuestore]

For gst/hst reciepts are used to claim back *tax paid*, if you dont have reciepts you just cant claim back itc credit for *tax paid*. You can claim itc for many other things, *tax paid* on shipping, *tax paid* shipping supply, *tax paid* on advertising (gst charged ebay bill), *tax paid* for storage of goods ect.. if you dont have a reciept than just dont claim the itc *tax paid*. 

Income tax this is seperate, inventory and cost of goods is important tax saving for you. Without receipts is cost of goods zero or can you asses inventory start value im not sure there.. not something I have had to deal with. That maybe worth seeing a accountant for that question. 

[jules7970]

Income reporting: I kept a list of retail prices of the items of my inventory, other items are still sold by the retail store so prices can be found.  I just don't have the receipts. 

[jules7970]

Agree about the $30k+ for personal sales, but that was only because of the pandemic lockdown. I've never encountered so many sales before, nor do i expect it to be repeated. 

[jules7970]

i'm not so much concerned about getting a business # - although it doesn't really make sense considering 99% of my sales are to the US, my Ebay account is registered in the US with a US address.  

I'm more concerned if i need to report the sales to the CRA &be audited.   if so, I don't have receipts for old personal use items (cost of goods) that I sold for less than retail price. 

[hold.your.own.media]

How does one add the BN to an individual acct? Can't find it in there anywhere. Logged in to the my business acct and it wouldn't let me add it there either. Frustrating...

[furbackperformance]

Strange situation for me. I have sold personal items. Parts that I had for old cars, leftovers,extra stuff. I sold on Ebay and took PayPal for payment. It would accumulate and I would spend it on Ebay for parts I needed. Now you cannot take PayPal anymore and payments on Ebay go to your bank account. There is no way to leave the money there. I imagine there are alot of people like me that do this sell to buy thingy. It is not about profit at all. It is a loss really on something you get rid of just to accumulate spending money.

Not sure what to do. 

[recped]

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@furbackperformance wrote:

Not sure what to do. 

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Do what almost all buyers do, pay for your purchases with a credit card (hopefully a credit card with some form of cashback.)

If you don't have a credit card or don't want to use one then transfer funds from your bank to PayPal.

Now you cannot take PayPal anymore

While you cannot receive funds from sales  into your PayPal account you can still use PayPal to pay for purchases.

[cumos55]

If you are selling personal items then you will only report income from a sale  if something, one item,  sells for more than $1000.  The taxable amount is sold price minus $1000.

This income is defined as a capital gain.

If you have a record of a purchase for personal use, at a price of $1200... and then you sold the item for $2000...... then the capital gain,  the taxable amount is, $2000 minus $1200.

Consult a Tax Accountant to be sure of everything!!!