Canadian Bodybuilding
18-11-2008, 09:20 PM
The federal government, facing shrinking revenues because of a slowing economy, is going after online merchants who fail to pay taxes on the goods they sell, even though it has virtually no idea how widespread the problem might be.
Statistics Canada said yesterday it has no information on the underground economy with respect to online retailing. The most recent study conducted on Canada's grey market was made public in 1999 before online retailing exploded.
According to eBay Canada Ltd., more than 32,000 Canadians make all or a significant portion of their earnings by selling goods and services on the online auction website.
Such websites as Kijiji, Craigslist and eBay act as a clearing house where thousands of small retailers sell massive amounts of goods for cash and avoid paying either income or sales taxes.
In less than a decade, online retailing has become a significant business. More than 8.4 million Canadians bought $12.8 billion worth of goods over the Internet in 2007, according to Statistics Canada. The issue has become of keen interest to Ottawa, which is losing millions in tax revenues as a result of the underground economy online.
In February, the federal auditor-general plans to release a report on the issue entitled Ensuring Compliance.
"(The federal government) lacked the understanding of how (the underground online economy) worked and how big this economy actually was," said Alan K'necht, founder and chief executive of online consulting firm K'nechtology.
"They are realizing now that there are people making hundreds of thousands of dollars in revenue through sites like eBay and Craigslist and royalties through affiliate programs."
In the meantime, the Canada Revenue Agency is turning its attention toward eBay Canada with the intention of flushing out every major seller who has not declared income as a result of their eBay business.
The site has been ordered by the Federal Court of Appeal to hand over all information needed to identify eBay "Powersellers," ranging from people who make as little as $1,000 U.S. to more than $150,00 a month in sales. All eBay transactions are reported in U.S. dollars.
The information about the sellers will be released to Ottawa this week. Canada Revenue Agency wants to collect information that will identify at least 10,000 people and detail their sales in 2004 and 2005.
The revenue agency has also told eBay it will also be looking for sales data for 2006 and 2007, adding thousands more to the number of sellers affected.
A government spokesperson said eBay sellers who wish to restate their taxes can voluntarily do so and avoid any penalties or prosecution that might accompany a formal audit of their accounts.
EBay has emailed the sellers who will have their information released as part of the investigation. A forum on eBay's website, created to discuss the implications of CRA's request, almost instantly filled with worried Powersellers and attracted more than 110 posts as of yesterday afternoon.
Ottawa Citizen
Statistics Canada said yesterday it has no information on the underground economy with respect to online retailing. The most recent study conducted on Canada's grey market was made public in 1999 before online retailing exploded.
According to eBay Canada Ltd., more than 32,000 Canadians make all or a significant portion of their earnings by selling goods and services on the online auction website.
Such websites as Kijiji, Craigslist and eBay act as a clearing house where thousands of small retailers sell massive amounts of goods for cash and avoid paying either income or sales taxes.
In less than a decade, online retailing has become a significant business. More than 8.4 million Canadians bought $12.8 billion worth of goods over the Internet in 2007, according to Statistics Canada. The issue has become of keen interest to Ottawa, which is losing millions in tax revenues as a result of the underground economy online.
In February, the federal auditor-general plans to release a report on the issue entitled Ensuring Compliance.
"(The federal government) lacked the understanding of how (the underground online economy) worked and how big this economy actually was," said Alan K'necht, founder and chief executive of online consulting firm K'nechtology.
"They are realizing now that there are people making hundreds of thousands of dollars in revenue through sites like eBay and Craigslist and royalties through affiliate programs."
In the meantime, the Canada Revenue Agency is turning its attention toward eBay Canada with the intention of flushing out every major seller who has not declared income as a result of their eBay business.
The site has been ordered by the Federal Court of Appeal to hand over all information needed to identify eBay "Powersellers," ranging from people who make as little as $1,000 U.S. to more than $150,00 a month in sales. All eBay transactions are reported in U.S. dollars.
The information about the sellers will be released to Ottawa this week. Canada Revenue Agency wants to collect information that will identify at least 10,000 people and detail their sales in 2004 and 2005.
The revenue agency has also told eBay it will also be looking for sales data for 2006 and 2007, adding thousands more to the number of sellers affected.
A government spokesperson said eBay sellers who wish to restate their taxes can voluntarily do so and avoid any penalties or prosecution that might accompany a formal audit of their accounts.
EBay has emailed the sellers who will have their information released as part of the investigation. A forum on eBay's website, created to discuss the implications of CRA's request, almost instantly filled with worried Powersellers and attracted more than 110 posts as of yesterday afternoon.
Ottawa Citizen