Personal Finance

CRA going after paypal business holders

  • Last Updated:
  • Nov 17th, 2017 9:26 pm
[OP]
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Dec 3, 2004
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CRA going after paypal business holders

FYI: I just got an e-mail from Paypal which says the following. Anyone with a paypal business account who has done large transactions since January 1, 2014 can probably prepare for an audit.
Notice to Business Customers and Partners.

XXXX,

We’re writing to notify you that we have received a Federal Court order requiring us to disclose information to the Canada Revenue Agency (CRA) about PayPal Business account holders who sent or received a payment between January 1, 2014, and November 10, 2017. To comply with the order, PayPal Canada will make a disclosure to the CRA within 45 days of the date of the order.

If you have any questions about this email, please refer to our list of Frequently Asked Questions or contact us through our Help Centre.

Thank you for being a PayPal customer. We’re committed to helping your business get the best online and mobile commerce solutions so you can grow your business and compete in today’s digital economy.

PayPal Canada
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[OP]
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The FAQ is located here: https://www.paypal.com/ca/selfhelp/arti ... st-faq3755
PayPal has received a Federal Court order, which requires us to disclose information to the Canada Revenue Agency (CRA) about PayPal Business account holders that have received or sent a payment through their account between January 1, 2014 and November 10, 2017.


What information has PayPal been ordered to share with the CRA?
The court order requires PayPal to disclose the following information to the CRA about PayPal business account holders who received or sent a payment between January 1, 2014 and November 10, 2017: •The full name of every individual or corporation holding a business account that has a Canadian address;
•The date of birth of each individual holding a business account;
•The business name, if applicable;
•The telephone number(s) of the corporation or individual holding the business account, if available;
•The full address(es) of the corporation or individual holding the business account;
•The email address of the corporation or individual holding the business account;
•The Social Insurance Number and/or Business Number of the corporation or individual holding the Business Account, if available.
The following information on transactions made by the account holder: •The total number and value of received transactions for each calendar year between January 1, 2014 and November 10, 2017.
•The total number and value of sent transactions for each calendar year between January 1, 2014 and November 10, 2017.
When must PayPal release this information to the CRA?
PayPal has to disclose the information to the CRA within 45 days from November 10, 2017, the day the court order was issued. Affected account holders have been notified.

Will PayPal hand over my data to the CRA?
We are required to disclose information about business account holders who have received or sent a payment between January 1, 2014 and November 10, 2017. Affected account holders have been notified.

I have a PayPal account, how can I check if I have a personal or business account?
Log in to your PayPal account and select the Accounts tab. If you see an “Upgrade to a Business account” under Account Options, then you have a personal account.

I closed my PayPal account, does this mean my information must still be sent to the CRA?
If you sent or received a transaction from a PayPal business account any time between January 1, 2014 and November 10, 2017, we are required to disclose your information to the CRA.

What should affected account holders do now?
We encourage affected business account holders to file their taxes as appropriate.

If you have any specific questions about your tax returns for any calendar year, we encourage you to contact your professional advisor or the CRA directly. Contact information for the CRA can be found on the CRA website.

Do I need to do anything with my PayPal account?
No. You don’t need to do anything with your PayPal account.

Can I still access my PayPal account?
Yes. You can access your PayPal account as you normally do.

Can I still contact the CRA to file my tax returns?
As part of their regular obligations, PayPal business account holders are required to file their taxes as appropriate. Details on how to file your income tax returns can be found on the CRA website. The CRA has a Voluntary Disclosure Program that provides an opportunity to change a tax return you previously filed or to file a return that you should have filed. Contact your professional advisor. You can find more information about this on the CRA website. Please note that the Voluntary Disclosure Program will be changing on January 1, 2018. More information about the new program can be found on the CRA website.

Why does PayPal retain my transaction data?
As described in our Privacy Policy, we collect and use your information in order to provide services to you, and to help ensure the PayPal community is as safe and secure as possible. We are also required by law to retain transactional records for a certain period of time.

Where can I view my historical transactions in my account?
You can log in to your PayPal business account and select the Reports tab to view your transaction data. Please note that we must disclose to the CRA only the total number and value of payments sent and received.

Are other companies receiving similar orders to disclose customer information?
The CRA regularly seeks court orders as part of its mandate under the Income Tax Act and the Excise Tax Act to compel organizations to disclose information related to an individual or business for tax reporting purposes.
Deal Fanatic
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Nov 19, 2004
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Definitely a good thing. Only makes sense that PayPal should be reporting to the CRA. If you have been declaring your income then nothing to worry about, but those who were trying to evade taxes should be audited.
Member
Apr 17, 2014
308 posts
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Calgary
adamtheman wrote:
Nov 13th, 2017 5:56 pm
FYI: I just got an e-mail from Paypal which says the following. Anyone with a paypal business accounts who has done large transaction since January 1, 2014 can probably prepare for an audit.
Not only large transactions but ALL transactions will be reported.
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Oct 10, 2008
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don242 wrote:
Nov 13th, 2017 6:21 pm
Definitely a good thing. Only makes sense that PayPal should be reporting to the CRA. If you have been declaring your income then nothing to worry about, but those who were trying to evade taxes should be audited.
Typical 9-5 guy response
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Dec 10, 2008
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Just got the email.

I have a business PP account, but hardly use it for business use (one incoming payment since I opened it in 2015). It's okay to use it for personal use as well, correct?
Let's hug it out
Flickr
Deal Addict
Jan 2, 2015
1117 posts
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Ebay has to do the same thing in the US, and Uber in Quebec. The self-employed have to pay taxes like everyone else, so I'm not surprised. People who have filed their taxes properly have nothing to worry about.
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Nov 19, 2004
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drey2k wrote:
Nov 13th, 2017 6:32 pm
Typical 9-5 guy response
Typical ignorant response. I run my own business and pay my taxes based on ALL income. People trying to hide business income paid through PayPal deserve to be audited.

Again, if you are properly reporting income, there is nothing to worry about.
Member
Apr 17, 2014
308 posts
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Calgary
don242 wrote:
Nov 13th, 2017 6:47 pm
Typical ignorant response. I run my own business and pay my taxes based on ALL income. People trying to hide business income paid through PayPal deserve to be audited.

Again, if you are properly reporting income, there is nothing to worry about.
Totally agree with you.
Newbie
Jan 25, 2011
1 posts
1 upvote
Vancouver
I'm not sure I understand the point of this. This would show the CRA if your are in business, but Paypal transactions are not a great representation of income. If you sell something and receive a paypal transaction for the total amount, you have to subtract postage, packaging and the items cost from that amount (assuming you sold it online). So for a $10 transaction you may only have $2-$3 of income depending on margin.
[OP]
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Dec 3, 2004
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don242 wrote:
Nov 13th, 2017 6:47 pm
Again, if you are properly reporting income, there is nothing to worry about.
Wrong. Just because you report income appropriately doesn't mean you won't get audited. Paypal can show huge inflated amounts. For instance, let's say I bought a TV for $2,000 locally and I sold it on ebay for $2,500. I make a $500 profit, which I declare to CRA. Let's assume that my profit margin ends up being about 15% on all ebay transactions. But after fees (ebay/paypal) and shipping, I only made a profit margin of 8%.

So I sell $300,000 per year on ebay, and I declare $24,000 in income on my taxes. Now, CRA checks my paypal accounts and they send me an e-mail demanding I reconcile the entire $300,000, from start to finish, for every single year. How easy is that to do? Sure, I have nothing to "hide" but the costs of hiring an accountant to go through and find everything. What if I didn't save all the receipts for shipping. Oh, and paypal only goes back 3 years online (hilarious isn't it?). So how do I go back further than Nov 13, 2014? I'd have to contact them I suppose and pay fees to have the records manually searched.

Point is, you say "there is nothing to worry about" - wrong. As a business owner, you know that time is money. How much time and money do you think it takes to prove 4 years worth of audits?? CRA doesn't care - costs them $1.00 to send an audit letter via postal mail and costs the business owner $1000's of dollars to prove themselves innocent. With the CRA, you are guilty until proven innocent.
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Jan 19, 2005
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drey2k wrote:
Nov 13th, 2017 6:32 pm
Typical 9-5 guy response
HA!

That made me laugh. Because I agree (especially as someone who thinks that we already pay way too much in taxes to people who just piss that money away on their salaries, benefits, trips, vacations and useless projects, assessments and crap we really don't need).

The problem with this issue now is that a lot of users might have used Business Paypal accounts to send or receive transactions for personal purposes, send or receive money from friends, etc for transactions that don't fall under "income" (because Business accounts provide more options to people and a lot of users don't want to or need to keep both Personal and Business accounts (just for ease of use).

But what CRA will get and see is just a total $$ value of sent/received funds for each year, regardless what they were for, who they were for, etc... and my guess is they will just classify all of those as income.

That's gonna be some fun times for a lot of people and claims and audits trying to prove those were not income related transactions, to keep those amounts off the audits.
Newbie
Nov 12, 2017
1 posts
Can Someone please help answer my question:

I live in Canada but originally from middle Israel,
last year I went back and I found a friend who had a small tour company but was having problems getting customers, I returned and I created a tour website for him and made some promotion with google se , facebook and so on and with time, the website started to get some inquiries, I did help him answer and booked about 15 trips, the total cost was 36000USD total sold. of course this amount is what the client paid to my paypal as accepted the payment on his behalf, we had to pay all the hotels, all the private transportation, guides , food and so.

I would of made myself about 5% in each reservation.

I have to mention also that when I opened the paypal I put the name of the website as business, but we did not register any business at all. today I get the same email and I want to know what is the best way to deal with it.

any help is very much appreciated.

mina
[OP]
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Dec 3, 2004
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fantom wrote:
Nov 13th, 2017 7:03 pm
The problem with this issue now is that a lot of users might have used Business Paypal accounts to send or receive transactions for personal purposes, send or receive money from friends, etc for transactions that don't fall under "income" (because Business accounts provide more options to people and a lot of users don't want to or need to keep both Personal and Business accounts (just for ease of use).

But what CRA will get and see is just a total $$ value of sent/received funds for each year, regardless what they were for, who they were for, etc... and my guess is they will just classify all of those as income.

That's gonna be some fun times for a lot of people and claims and audits trying to prove those were not income related transactions, to keep those amounts off the audits.
Bingo. What's to stop CRA from blanket sending out tens of thousands of letters to every single person? Then the onus is on them. As you said, lots of innocent people will get swept up in it, especially because CRA only will see the total numbers. Some people who are innocent may not know how to deal with the audit, or may simply ignore it, and they end up owing a lot to CRA. Not everyone is as savvy as RFD'ers.

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