In a significant move, the Canada Revenue Agency has intensified its drive to trace the eBay merchants who have been avoiding paying taxes on profits they make from selling their merchandise online on this popular auction website. So far, just 50 Canadian eBay merchants have volunteered to pay their taxes that were outstanding since July last. It may be mentioned here that the move by these 50 Canadian eBay merchants came in the wake of the last opportunity offered by the Revenue Minister Jean-Pierre Blackburn in July to the high volume e-Bay vendors to pay their taxes without having to pay any penalty on the outstanding amounts.
As per the provisions in the Canadian tax law, any profit made by an individual by selling any item is regarded as an income, irrespective of the manner or the venue of the sale. Recently, a Canadian court has issued an order directing the eBay authorities to make available the names, addresses as well as the sales records of the website's high-volume merchants to the Canadian tax officials.
In compliance of the court order, eBay has already submitted the details regarding the high-volume sellers on the website to the Canada Revenue Agency. However, eBay has not revealed these details to the public on the pretext of security reasons, but admitted that there are several thousand such high-volume sellers on the website in Canada alone. The website authorities have further said that they had conveyed the users much in advance that they were passing on their sale records and other details to the Canadian tax authorities.
Meanwhile, the Canadian federal agency has informed CBC News that so far it has dealt with just nine of the positive voluntary revelations and that the total amount of previously undeclared income of these nine voluntary disclosures were to the tune of $275,000. At the same time, the federal agency said that it has already initiated open audits of the merchants whose names were provided by eBay, but have not volunteered to pay their outstanding taxes on the profits made from sales on the website. According to recent court order in this regard, only merchants who earned a minimum of $20,000 and had managed 24 sales in a single year or who made over $100,000 in one calendar year irrespective of the number of sales could be termed as high-volume sellers on eBay.
It may be mentioned here that eBay Canada began the process of providing the details of the high-volume sellers as well as their sales records to the federal agency since last November. The action came in the wake of a decision of a Court of Appeal decision in April 2008 that endorsed a judgment of a Federal Court necessitating that eBay Canada hand over complete account information regarding the high-volume sellers on the website to the Canadian tax authorities.
It is important to note that any individual or business establishment failing to comply with the Canadian tax laws are liable to pay any or all unpaid taxes, interest accrued on the tax amount as well as monetary fines and other sanctions. However, taxpayers who presented themselves under the voluntary income disclosure program will not be required to pay any penalty or be put on trial provided they make a complete revelation before the federal agency initiates any audit of their account or acquiescence action.