CRA will commence auditing EBay sellers this fall. Jean-Pierre Blackburn, the Revenue Minister announced on July 30, 2009 that anyone who has sold products on EBay could avoid audits, penalties, interest and criminal prosecution by doing a voluntary disclosure and declaring the income to the CRA.
Doing business on EBay is no different than regular business and the income should be reported.
CRA won a decision in the Federal Court of Canada against EBay Canada and now has access to EBay sellers’ revenue information. CRA is not interested in individuals who infrequently sell personal items at a loss. You do not pay tax on personal use property at a loss. CRA obtained information from EBay and is now going through a matching process to look for potential audits. They will be matching the information from EBay to GST and tax returns filed. CRA has now put EBay sellers on notice.
Once a voluntary disclosure is made with CRA the taxpayer has 90 days to amend or file the tax or GST returns. During the 90 day period, the taxpayer is protected from prosecution.
Mark Feldstein Corporate Taxes, Personal Taxes, Tax Amnesty CRA, ebay seller, Tax Amnesty, Tax Evasion, Unclaimed Income
Fairway Travel Inc was found guilty on July 8, 2009 for tax evasion. During the course of a CRA audit, it was discovered that there were non-deductible expenses claimed in the amount of $325,602. Consequently, the company evaded paying federal income taxes in the amount of $75,395. The Company was fined $150,000 in addition to taxes and interest.
If the company would have applied under the voluntary disclosure program before CRA commenced an action, then there would have been no penalties or interest. CRA can assess a penalty of up to 50% of the unpaid taxes due to gross negligence. In addition, the court on summary conviction can levy a fine from 50% to 200% of the tax evaded and sentence them to jail for two years.
Mark Feldstein Corporate Taxes, Tax Amnesty, Tax Convictions CRA, Tax Evasion, tax penalties, Unclaimed Income
Matthew Norman Burse of Stoney Creek pleaded guilty on July 2, 2009 in the Ontario Court or Justice. Mr. Burse was charged with income tax evasion for 2003 and 2004.
CRA’s investigation revealed that Mr. Burse did not report his income earned from the delivery of newspapers. During the course of the audit, Mr. Burse did not disclose to the auditor a bank account where the majority of his income was being deposited. The CRA investigation revealed that $71,737 was not reported in 2003 and $70,715 was not reported in 2004.
Mr. Burse was fined $13,942 which represents 50% of the federal tax evaded and was ordered to pay within 30 months. If Mr. Burse filed a voluntary disclosure before he was audited, there would have been no penalties or prosecution. He would only have to pay taxes and interest.
Mark Feldstein Personal Taxes CRA, fraud, tax penalties, Unclaimed Income