In March we told you that Square received a court order to disclose customer information to Canada Revenue Agency (CRA). Now, PayPal is facing a similar order from CRA.
What Information Will PayPal Disclose to CRA?
“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,” the company recently informed its members. “To comply with the order, PayPal Canada will make a disclosure to the CRA within 45 days of the date of the order.” The court order was issued on November 10, 2017.
The information PayPal will release to CRA is as follows:
- 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 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. [1]
If a transaction was made during the stipulated time frame, the information will be released whether or not account holders close their accounts.
Why is CRA Asking PayPal for this Information?
The Income Tax Act and the Excise Tax Act gives CRA the power to ask for information disclosure to prevent tax evasion from individuals and businesses.
How Does this Affect PayPal Users?
CRA will be checking transactions against reported – and unreported – income. If you have not properly reported your income, you could get audited.
Lots of PayPal users are part of the growing gig economy. While gigs are an excellent way to make money and are a gateway for entrepreneurs to test out new company ideas, gigs also make it very easy to hide income from CRA. Even if your motives are pure and you are a good tax-paying citizen, many people fail realize that income is income, no matter where it comes from – and CRA needs to know about your income.
While it may seem like just a side thing for you to make extra cash selling baby bonnets on Etsy, flipping antiques on eBay, or driving for Uber, you could come under scrutiny if your income from such pursuits was not properly reported.
Once your gig ventures reach a certain threshold, you must collect and remit GST. If you have been earning $30,000 or more in revenue in a year, you should have a GST number.
I Didn’t Report my Income. Now What?
CRA realizes that most people have the best motives and not reporting income could be an unintentional oversight. If you have not filed your returns or, to put it bluntly, not filed the type of return that you should have filed, you can take advantage of the Voluntary Disclosure Program (VDP).
Those using the VDP have a limited amount of time to do a proper filing. You must follow the instructions carefully, and you can see what the VDP involves by visiting this link: www.canada.ca/en/revenue-agency/campaigns/ic00-1r6-voluntary-disclosures-program.html.
How AF Accounting can Help
Most people don’t read up on tax law as a hobby, and those that do their due diligence find the rules and regulations confusing. AF Accounting is here for small business owners and for those in the gig economy. In addition to providing à la carte services, such as cloud accounting with Xero, budgeting and virtual CFO, we provide tax planning and tax advice.
Worried by PayPal’s mandated disclosure? A small business or gig in need of some help to ensure you are following CRA rules? Contact us today.
[1] https://www.paypal.com/ca/selfhelp/article/cra-information-request-faq3755
