It doesn't work this way. Its not like buying/selling stocks or real estate, its a transaction that counts as income no matter if you take a loss on it or not. Any money hes made from buying/selling gear is seen by income by the CRA, thus its technically required to have taxes on it. The CRA sees it as 'oh heres a guy selling guitar gear out of his basement, thats a business', etc.Paypal records are a good thing in your case. They will either show a loss or very slim profit... in which case you wont get taxed and they'll leave you alone.
They are probably turning over stones looking for undeclared retailers.... whether they consider it a hobby or not, if they are making a profit... the IR will want its cut.