Based on the (thankfully) limited time I have spent in and around prison, there is a clearly defined pecking order amongst inmates, with child molesters occupying the nadir and (failed) bank robbers at the zenith. My illegal immigrants and petty crooks generally fell comfortably in the middle. But I wonder where someone being sent to prison for failing to report income earned from selling porcelain knickknacks or toy trains on eBay will fit in?
We soon might find out. eBay Canada has announced that it will comply (albeit reluctantly) with an order from the Federal Court of Appeal to release to the Canada Revenue Agency gross sales data from 2004 and 2005 for eBay PowerSellers. Participants in the PowerSeller program must average at least $1,000 in sales per month for at least 3 months.
When I heard this news I had to go back and check my old eBay information to see if I was affected. In 2004, I had substantial sales on eBay and tried to get in on the PowerSeller program, but my numbers were just a smidge below the threshold so I wasn’t allowed to join their uppity little club. At the time I was a little pissed, but in hindsight I’m pretty glad they didn’t want me, given that one of the big perks of this optional club has now become CRA audits. It’s kind of like signing up for a Club Z card at Zeller’s and getting a free rectal exam from an angry proctologist with big hands and jagged fingernails. I didn’t want to be in their stupid club anyway.
This should serve as a nice little reminder- if you’re making money, you’re going to be taxed on it. There are all kinds of wonderful ways to reduce your tax burden legally, but hoping that nobody picks up on the thousands of dollars you’re making selling things online isn’t one of them. If you’ve misreported in the past, or failed to include income that probably should have been included, talk to a tax lawyer or accountant to see what can be done. CRA has a voluntary disclosures program that allows you to correct these mistakes and possibly avoid prosecution.
If you’re just selling random junk on eBay, you probably don’t have to worry about the taxman coming to call. While any gains from selling property (even personal items) are taxable, you’re only taxed if there’s an actual gain- that is, you sold it for more than you paid. For the vast majority of people just getting rid of stuff they found in the attic, there’s not going to be any gain at all. Even if you do make a little bit of profit, there’s a $1,000 exemption for most personal property, so you only get taxed on any profit in excess of $1,000. If you’re turning thousand dollar profits on random items lying around your garage that aren’t bags of marijuana, I’m impressed. However, if you’re buying or collecting items for the purpose of selling them online you need to be aware that there may be tax consequences. When your eBay-ing turns into a business, you get taxed just like the rest of us. I don’t like being taxed either, but it’s surely better than the notoriously bad turkey soup at Her Majesty’s Penitentiary.
Hilarious comic by xkcd.
You might also enjoy:- Donate Securites to Save Tax Dollars...
- Canada Savings Bonds: Just Not Worth It?...
- Dr. Romance Prescribes a Prenup...
- Ask the Readers: Are Deficits Okay?...
Related posts brought to you by Yet Another Related Posts Plugin.
{ 1 trackback }
{ 6 comments… read them below or add one }
What’s next? Revenue Canada monitoring garage sales and Craigslist?
I pay taxes, why shouldn’t they? If you’re a “power seller”, you’re running a business, and part of that is paying taxes on profits. You can still write off all kinds of expenses, but you still need to pay taxes like the rest of us.
I have to say I agree with Bruce. Fair is fair, but I’m also glad I fall solidly in the “getting rid of junk” category and have never really made a profit. Still, it feels like a profit when I can take something I’ve owned and used, and get some cash back for it…
That comic just made me spit my drink all over the desk. So did the bit about the angry proctologist. Thanks.
Fair’s fair, though. I’ll admit that I didn’t report my earnings on that garage sale that netted me $15 a few years back, but the fact is that eBay is a full time job for some people, and often a very profitable one. Their earnings should be taxed.
@Bruce’s “I pay taxes, why shouldn’t they?”: How about - “They don’t pay taxes, why should I”?
I sell many items. My sales last year was over $50,000 on eBay. But i was selling for someone else mostly. And the items they had, they had spent like $700 on this particular item, but selling it for much less because sales were down. These items were his father’s from collecting them for over 40 years. I was spending over $1,000 on eBay, and turning these items around and reselling them on eBay. So even though I should over $50,000 in sales, it doesn’t mean it’s income. But according to the US IRS tax code, paying taxes is a volunteer option. The first law of the IRS indicates that paying taxes is for the tobacco and firearms. It’s actually deleted from taxpayers seeing it. on the back of many forms. It’s an interesting thing. But the US Constitution gives us many protective rights.