So many tax issues with what you are doing.canuckchuck wrote: ↑Nov 14th, 2017 11:38 amI've been using a business paypal account to run a personal items classifieds site. It take no commissions or make any revenue but the website does have users who sell and buy items on it. The amounts collected are sent to the Paypal business account and then forwarded to the selling/buying party. Any thoughts on how this would affect someone in like me? It was my understanding that if you do not make profits you aren't running a business, therefore it's like selling on Craiglist or Kijiji, through a third party platform. However, the platform it self it just a hobby not a business and doesn't make any actual revenue. I pay for the operation of the website and other expenses with my personal income (actual job) and do not report the expenses because it's a hobby for me.
It is considered a big NO NO from a tax perspective to mix personal and business transactions. When this happens, the CRA will generally disallow the business aspect of your claim and consider everything as a personal transaction. This means you cannot claim expenses and any income will be taxed at the much higher personal rate.
You also need to get your head around profits, when a business is said to exist, revenue and the like. Revenue is generally the income that a business makes from the sale of goods and services. So, if you sold goods and you have a business - then you have revenue. Businesses exist in the absence of profits and losses. Lots of businesses record losses and are still a business.
Whether you have a hobby or a business will be determined by the CRA and as I stated above, it is to your advantage to be considered a business and not a hobby, as the income is taxed differently. Income is still income, regardless of how it is earned. It is how it is taxed that is your primary concern.
In your case, it seems that yes, you do have revenue from your venture although the venture is not profitable. You also have a business account handling through which these revenues flow. Revenue and profit are not the same things.
If you have not been claiming this venture on your taxes, at the very least I would suggest that you start collecting all your receipts and paperwork for this venture. You need to be prepared to defend why you did not claim this on your taxes and be ready to show that you suffered a loss because of it.