Personal Finance

Paypal and CRA (taxes)

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Sr. Member
May 25, 2008
533 posts
32 upvotes
Toronto

Paypal and CRA (taxes)

Do I have to report the money I get from Paypal when I do my taxes? Does Paypal give any information to the CRA? I'm really confused about this, because some of the funds in my account is not really "income" so how would I do this??
26 replies
Banned
Feb 25, 2007
2007 posts
792 upvotes
Woodbridge
good question,i would like to know aswell. i think aslong as you print your recipts and you have registered your business with the city . you can proceed to collect taxes.
Go Big or Go Home! , Chi Chi Get the Yayo!
Deal Addict
Sep 24, 2007
4107 posts
1543 upvotes
Ontario
I've never given paypal my sin number so i don't see how they could...
Deal Addict
Jan 30, 2012
1836 posts
1399 upvotes
TORONTO
kt86 wrote: Do I have to report the money I get from Paypal when I do my taxes? Does Paypal give any information to the CRA? I'm really confused about this, because some of the funds in my account is not really "income" so how would I do this??
It's not clear what you're asking. Paypal is not a source of income, paypal is a payment method much like interac or email money transfer.

If you are running a business, you are supposed to declare your revenue, collect & remit GST/HST/PST (if any applies), deduct your business expenses and finally pay income tax on your business profit or deduct your business loss from other income.

If your business always gets paid in cash, you still have these tax obligations, even though it would be easy to hide revenue and not pay tax.

If you are running a business and you get paid by paypal, what are the odds of being caught for not declaring revenue? Ask an accountant or tax lawyer.

Sounds like you are confused as to whether you're running a business or not - answer that question first.
Deal Addict
Dec 5, 2003
1456 posts
158 upvotes
kt86 wrote: Do I have to report the money I get from Paypal when I do my taxes? Does Paypal give any information to the CRA? I'm really confused about this, because some of the funds in my account is not really "income" so how would I do this??
Assuming you are talking about proceeds from Ebay, do you buy and sell stuff (ie. inventory) or do you sell all your old junk you don't want. First one is taxable second one is not (unless it falls into specific circumstances which you are 99% not likely to fall into).
Sr. Member
May 25, 2008
533 posts
32 upvotes
Toronto
Phoenix88 wrote: Assuming you are talking about proceeds from Ebay, do you buy and sell stuff (ie. inventory) or do you sell all your old junk you don't want. First one is taxable second one is not (unless it falls into specific circumstances which you are 99% not likely to fall into).
That's sort of what I'm asking.. I am selling some stuff to make money... I guess you can call that my business.. but I'm also getting money from stuff I sell around the house. I don't really consider selling old stuff around the house income.. right?

So basically... will Paypal report to the CRA how much funds I have received from paypal payments as a whole?? How do I prove that some of the transactions are not "income"?
Deal Addict
User avatar
Dec 26, 2010
1736 posts
776 upvotes
Calgary
You have to report your income. My bank account has personal non-income funds and it has income funds. Guess which ones I report there?
Jr. Member
Nov 9, 2012
119 posts
11 upvotes
GUELPH
kt86 wrote: That's sort of what I'm asking.. I am selling some stuff to make money... I guess you can call that my business.. but I'm also getting money from stuff I sell around the house. I don't really consider selling old stuff around the house income.. right?

So basically... will Paypal report to the CRA how much funds I have received from paypal payments as a whole?? How do I prove that some of the transactions are not "income"?
As the others have mentioned, Paypal is a way of transferring funds. As you mention, its unlikely CRA will track it as it's difficult to determine how much is "profit" vs "sales" since some is actually profit and some is proceeds of items around your house. If anything (even though the chances are almost zero it would happen), CRA would realize you have sales on Paypal and ask you to show them the difference between what you purchased something for, and what you sold it for- "income".

Paypal will not report anything to the CRA, but to answer your question- you need to keep the records yourself. Think Microsoft Excel.
Deal Fanatic
User avatar
Mar 20, 2009
8862 posts
2693 upvotes
Vancouver
Paypal is required to report amounts over $20,000 to the IRS in the U.S., and they require a taxpayer ID # if you reach that amount. Assuming that they won't reach a similar agreement with the CRA is a bad idea.
Deal Fanatic
Apr 23, 2009
5161 posts
708 upvotes
South of Ottawa
It's not paypal you have to be concerned about, it's Ebay.

This is an old news story but still relevant.

"In 2007, a Federal Court of Canada decision required eBay Canada to provide tax officials with the full account information on their sellers, including their names, user IDs, mailing addresses, billing addresses, phone numbers and email addresses."



http://www.cbc.ca/news/story/2009/07/30/ebay-tax.html
Deal Fanatic
User avatar
Apr 29, 2008
8010 posts
4748 upvotes
Montreal
You have to report sales of goods with profit intent. You are allowed to deduct your expenses to make these sales.

You don't have to report sales of personal items (example: your 2 year old iPod you don't need because you got a smartphone now, your used video games you played and don't play anymore, etc).

If you are subject to a tax audit, you might have to prove what is personal and why you did not report it.

Paypal won't probably report your paypal balance / paypal transactions, unless ordered by court ?

eBay has been asked in the past to report data to CRA about certain powersellers. eBay tried in court to be exempt from this but they lost their case. CRA might ask them information again in the future.


Do you have to ? Yes.

Will you get caught ? That's another question.
Sr. Member
May 25, 2008
533 posts
32 upvotes
Toronto
Forget Ebay.. I'm not even selling on Ebay. I'm just asking about Paypal. Here's an example:

$500 is income + $500 not income = $1000 withdrawn to my bank account... So in the bank statement... it will show $1000 from Paypal... So Yes I'm planning to report the income.. which is $500 in this case... but the CRA will see it as $1000 from Paypal.. how do I prove that $500 is not income from that $1000 payment? Will they even ask or am I good for reporting something..? This online stuff is tricky.. just want to make sure I'm doing it right..
Newbie
Mar 5, 2013
2 posts
Paypal is not a bank. Paypal balance isn't even real, Paypal is owned by eBay. It is just a bunch of numbers on a random site. They can freeze your account at any time for no reason because they don't want you to withdraw. When you withdraw you are essentially asking Paypal to pay you legal tender. That balance is payment which is seen as income. It's no different from forum gold on sites. That's why when you transfer your Paypal Balance to the Bank, it says "Payment" and not transfer. That's what I think.
Deal Fanatic
Apr 23, 2009
5161 posts
708 upvotes
South of Ottawa
kt86 wrote: Forget Ebay.. I'm not even selling on Ebay. I'm just asking about Paypal. Here's an example:

$500 is income + $500 not income = $1000 withdrawn to my bank account... So in the bank statement... it will show $1000 from Paypal... So Yes I'm planning to report the income.. which is $500 in this case... but the CRA will see it as $1000 from Paypal.. how do I prove that $500 is not income from that $1000 payment? Will they even ask or am I good for reporting something..? This online stuff is tricky.. just want to make sure I'm doing it right..
If you're selling stuff online and using paypal, there has to be a record of the transaction. Your problem will be proving personal vs. business items. Smart move would be to have two separate accounts.
Member
Aug 16, 2004
365 posts
85 upvotes
kt86 wrote: how do I prove that $500 is not income from that $1000 payment?
By keeping good records of your business transactions. Make sure you know what you sold, to whom, the date, the amount (convert to CAD for tax purposes), and ideally record the paypal transaction # as well so you can show what each Paypal transaction was for.
Will they even ask or am I good for reporting something..?
They won't ask about it unless you are being audited. It's not very likely that the CRA will ever decide to audit you, but that's not an excuse to mis-report income or to be lazy about keeping proper records. Make sure to keep those records for 7 years, as they can audit you for past tax returns as well as the current year.
Deal Addict
May 2, 2007
3013 posts
270 upvotes
Kingston
Seriously think about this

You buy a cd for $20 and year or two later you sell for $10. Would you report that to CRA? No you wouldn't since it's not income.

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