Personal Finance

CRA going after paypal business holders

  • Last Updated:
  • Nov 17th, 2017 9:26 pm
Newbie
Nov 12, 2017
19 posts
1 upvote
I calculated the amount owed, and according to the calculators I tested it on, I owe $0. My ANNUAL INCOME exceeds no more than $9,000.

The government of Canada does not collect taxes for those NOT earning less than $11,635 a year. If you are not, don't expect a knock on your door. If so, you should start getting ready for prison if you have not done your tax returns yet.
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May 9, 2009
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GeorgeG837585 wrote:
Nov 14th, 2017 2:14 pm
I calculated the amount owed, and according to the calculators I tested it on, I owe $0. My ANNUAL INCOME exceeds no more than $9,000.

The government of Canada does not collect taxes for those NOT earning less than $11,635 a year. If you are not, don't expect a knock on your door. If so, you should start getting ready for prison if you have not done your tax returns yet.
Are you including your income as a lifeguard in there?
Member
Apr 17, 2014
308 posts
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Calgary
GeorgeG837585 wrote:
Nov 14th, 2017 2:14 pm
I calculated the amount owed, and according to the calculators I tested it on, I owe $0. My ANNUAL INCOME exceeds no more than $9,000.

The government of Canada does not collect taxes for those NOT earning less than $11,635 a year. If you are not, don't expect a knock on your door. If so, you should start getting ready for prison if you have not done your tax returns yet.
Nonetheless you are required to file a tax return. It benefits you in terms of GST credits and Working Income tax Benefit.
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Jan 27, 2007
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bewiseman wrote:
Nov 14th, 2017 2:02 pm
No, no ITC taken on the purchase. In fact, this whole issue of HST has been completely ignored since I incorrectly believed that my revenue was only the $8 delivery fee. I believed incorrectly that I was still under the 30K threshold.

It's still a multi-thousand dollar problem since those delivery fees add up and I now owe the 13% on them.

I think I actually need to break down the invoice for the customer so that they see more. Currently, it looks like this after the HST modification:

Subtotal: $27.85
Delivery Fee: $8.00
HST: $1.04
Total: $36.89

That Subtotal needs to be further broken down ( $24.65 + $3.20) so you as my customer see:

Subtotal: $24.65
Delivery Fee: $8.00
HST: $4.24
Total: $36.89
Yes! We are on the same page now. Make sure you take the ITC on the booze purchase as well.

Two things - technically you can go back 4 years and claim previously unclaimed ITCs. You would have that on the booze purchases at the lcbo and you could take the itcs if you have receipts to back it up.

Those unclaimed itcs could help reduce remittance of hst on the booze sales.

Secondly, technically you can go back and get the hst from your customers going back, but I assume that would be a bit of an issue with tracking and actually trying to get them to pay.
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Nov 19, 2004
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Cambridge, ON
hitibiti wrote:
Nov 14th, 2017 2:13 pm
and what about if someone have business account he just send money per yera expemle 10.000 but just receive $3000 ? he need to pay tax to ?
What are you sending money for? What are you receiving money for? Paypal is only one method of payment or receiving money. Obviously any cash, cheques, credit card, wire transfers, etc. all get factored in to your income if it is related to a business. You can use Paypal and send out $10K and get $0 incoming through paypal. Doesn't mean anything, if your income is coming in through cash and credit card payments. Income is from all sources, not limited to a specific payment method.
Newbie
Nov 12, 2017
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psyko514 wrote:
Nov 14th, 2017 2:24 pm
Are you including your income as a lifeguard in there?
Yes the income for lifeguarding is included.
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Jul 18, 2016
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dutchca wrote:
Nov 14th, 2017 2:25 pm
Yes! We are on the same page now. Make sure you take the ITC on the booze purchase as well.

Two things - technically you can go back 4 years and claim previously unclaimed ITCs. You would have that on the booze purchases at the lcbo and you could take the itcs if you have receipts to back it up.

Those unclaimed itcs could help reduce remittance of hst on the booze sales.

Secondly, technically you can go back and get the hst from your customers going back, but I assume that would be a bit of an issue with tracking and actually trying to get them to pay.
Yikes. 5734 orders have not had HST charged when it should have been charged. However, I do have a complete accounting of the product ordered and its cost. Was I keeping all of the receipts for the purchases at the LCBO and Beer Store? No. However, surely a rational CRA representative could look at any Beer Store receipt and see the obvious HST cost. Also, thanks to AMEX many of those charges in 2017 appear on my credit card.

Edit: On one hand I curse the extra cost this error of mine creates. On the other hand, this totally reconciles the activity in my business account. Furthermore, reporting the much large number as my revenue will help me to qualify for business loans to expand my business. Nice blessing in disguise.
Last edited by bewiseman on Nov 14th, 2017 2:51 pm, edited 2 times in total.
Newbie
Nov 12, 2017
19 posts
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utelurtz wrote:
Nov 14th, 2017 2:25 pm
Nonetheless you are required to file a tax return. It benefits you in terms of GST credits and Working Income tax Benefit.
I do fill out a T1 for every new employment I obtain. Some employers have deducted tax form my wage. So, technically, I have been paying my taxes.
Newbie
Nov 12, 2017
6 posts
don242 wrote:
Nov 14th, 2017 2:40 pm
What are you sending money for? What are you receiving money for? Paypal is only one method of payment or receiving money. Obviously any cash, cheques, credit card, wire transfers, etc. all get factored in to your income if it is related to a business. You can use Paypal and send out $10K and get $0 incoming through paypal. Doesn't mean anything, if your income is coming in through cash and credit card payments. Income is from all sources, not limited to a specific payment method.
i create business account to selling and buy unlock code phone cellphones but problem i never user my busniss account i send , all time i send with my normal account as gift
i need pay tax for that and taxt must be payed for receiving money or sending money cose in my case i send as gift PayPal send me email that on 2016 my business account
sending 0$ and receiving 0$
Member
Apr 17, 2014
308 posts
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Calgary
GeorgeG837585 wrote:
Nov 14th, 2017 2:52 pm
I do fill out a T1 for every new employment I obtain. Some employers have deducted tax form my wage. So, technically, I have been paying my taxes.
Well, do what you think. But in Canada you are required to file a tax return as well.
Newbie
Nov 12, 2017
19 posts
1 upvote
utelurtz wrote:
Nov 14th, 2017 3:12 pm
Well, do what you think. But in Canada you are required to file a tax return as well.
The tax work is done by my dad.
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Apr 18, 2013
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GeorgeG837585 wrote:
Nov 14th, 2017 3:21 pm
The tax work is done by my dad.
Then both you and your Dad are going to prison.
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Nov 19, 2004
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hitibiti wrote:
Nov 14th, 2017 2:54 pm
i create business account to selling and buy unlock code phone cellphones but problem i never user my busniss account i send , all time i send with my normal account as gift
i need pay tax for that and taxt must be payed for receiving money or sending money cose in my case i send as gift PayPal send me email that on 2016 my business account
sending 0$ and receiving 0$
So you pay tax on the money received for selling the phones minus the expenses (buying the phones and costs for running business). It doesn't matter how you are paid for the sale, it is revenue. That is what you need to show. The tax is then calculated against the net. Sending and receiving money on paypal in itself does not mean taxes. Paypal is just one vehicle for moving money. You must keep track of your income and report.

The CRA is just looking at paypal transactions to help decide if there is money being moved that doesn't seem to be reported. In which case they may choose to ask you to support the transaction with your records.
Newbie
Nov 12, 2017
19 posts
1 upvote
gbill2004 wrote:
Nov 14th, 2017 3:22 pm
Then both you and your Dad are going to prison.
I am only 17 and I high doubt that they will go after me. I will call to make sure what you said is not true. Highly doubt you are law enforcement of part of the CRA
Deal Addict
Jan 2, 2015
1113 posts
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Toronto, ON
For those saying you don't need to file if you made less than the basic personal amount, that's not entirely true. If you made more than $3,500 of net business income, you have to pay CPP. Of course, if your income is low, you might actually get more money from the Working Income Tax Benefit. You might not have to pay tax due to low net business income, but it's always better to file to prove this (and get any benefits you can out of the tax system while you're at it). This is especially true if you have lots of revenue (eg $300,000) but low net income (eg $5,000). The CRA is not clairvoyant and will not know your expenses if you don't tell them, but they can "assume" you had low expenses and assess a lot of tax.

Furthermore if you lost money, you can claim losses against other income (for instance, against lifeguard income) or if you have no other income, carry it forward for a later year where you have to pay taxes.

TLDR: If your revenue is more than $3,500, file your taxes. If you are both employed and self-employed, file your taxes (and not just what's on your T4), even if your income is low.
GeorgeG837585 wrote:
Nov 14th, 2017 3:38 pm
I am only 17 and I high doubt that they will go after me. I will call to make sure what you said is not true. Highly doubt you are law enforcement of part of the CRA
He's just trying to scare you. Noone is going to jail for $24. Putting you in jail for 1 hour costs more than that.

If you are employed and also made $24 via Paypal, you actually should report that $24. (If that's your revenue, you should report that as gross business income, and your net business income would be the only part of that taxed.)

Having said that, the amount is small. You might owe $5 on that, plus late penalties and interest. It's literally not worth the CRA's time to go after you for that.

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