Is a paypal receipt valid to use as income deduction?

[what-sales-direct]

Hi there,

I have purchased many items for my business via eBay and PayPal. Paypal provides a receipt but I don't think it would hold up as an expense if I get audited any ideas?

Are eBay sellers obligated to supply a receipt when asked for one?

Thanks for your input.

[reallynicestamps]

@pierrelebel

Pierre is now retired, but he has been our go to guy on tax matters for decades.

If you are a business, you probably have an accountant. This is the kind of advice you pay him to give you.

[pierrelebel]

Good afternoon.

Looking at your feedback information, it appears that you are a very busy seller on eBay.  Obviously you are running a business and I hope you are GST/HST registered since your annual sales revenues (including shipping charge) see, to exceed Cdn$ 30,000.  GST/HST registration is compulsory at that level.

For income tax purposes, you need to add your revenues, substract your cost of goods sold to get to your gross profit and then deduct your business related expenses to get to your net profit (to be reported on line 135 of your tax return).

Yes, you should have receipts for all your purchases and expenses.  A paid PayPal invoice can act as a receipt for tax purposes.

[what-sales-direct]

@pierrelebel

Thanks for your response.  Yes, I am registered and all is in order.

But when I buy an item from eBay for my business I don't get a PayPal invoice.

Paypal only gives you a receipt with the amount you paid, the item you purchased and the seller's name. From what my accounted told me, a valid invoice needs sellers name or business name, sellers address and tax id if applicable.

I am assuming from what you mentioned that the PayPal receipt is not valid, and I will need to ask the seller to provide an invoice?

Thanks

[pierrelebel]

" ...a valid invoice needs sellers name or business name, sellers address and tax id if applicable."

There is no point in being more Catholic than the Pope!

Print a copy of your PayPal payment to your supplier and that will be sufficient for income tax purposes to justify either the cost of an item or business related expense.  If your accountant does not agree, find another one.

[maximus7001]

Like Peirre said its all good.  Just print off the paypal receipt and stick in in your filing cabinet. Better yet print out the ebay receipt as well and staple them together first.

Canada customs and US customs also accept these receipts as legit, in that case make sure the currency is noted.