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Canadian government demands eBay sellers pay tax

By Bob Ewing     Jul 31, 2009 in Business
The Canadian government says online income is taxable and has warned Internet entrepreneurs who use eBay and other Web-based sales venues to pay up or face prosecution.
As the Globe and Mail reports, Canada's Revenue Minister Jean-Pierre Blackburn said “Taxpayers should know that the tax laws that apply to traditional commerce apply in the same way to electronic commerce, like eBay selling. I strongly encourage eBay sellers and, for that matter, any taxpayer who has not already done so, to correct their tax affairs as soon as possible to avoid penalties or prosecution.”
The Canada Revenue Agency (CRA) is waiting to receive detailed information from eBay before auditing sellers which will likely begin at summer's end.
The Federal Court of Canada, in September 2007, ordered eBay Canada Inc. to provide the Canada Revenue Agency with the names of its high-volume sellers, their contact information and their sales records.
EBay appealed the decision, saying its records are kept outside the country by its parent company; however, the appeal was rejected in April.
The CRA can now access personal information to determine if the sellers have properly reported their online income.
“If the CRA determines that an individual or a business did not comply with the tax laws, the CRA will take any necessary action,” the release from Revenue Canada stated.
“In addition to paying any outstanding taxes plus interest, consequences may include penalties, as well as legal actions that could result in fines and other imposed sanctions.”
To avoid paying these fines and penalties, taxpayers who have failed to file income tax returns for past years or who have not reported all their income can voluntarily correct their tax situation," stated Minister Blackburn.
Taxpayers who take the initiative to correct or disclose any information, under the Voluntary Disclosures Program (VDP), will not be penalized or prosecuted if they make a full disclosure before the CRA starts any audit or other compliance action.
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