Getting audited by the Canada Revenue Agency largely due to GAS

Discussion in 'Guitars in General' started by vortexxxx, Aug 12, 2019.

  1. vortexxxx

    vortexxxx Member

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    Yes. I may convince them it's not but I dont know if that will matter.
     
  2. vortexxxx

    vortexxxx Member

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    Well, I'm going to go through my transactions and try to match one thing with another to show profit or loss. I do need to find out about guitars bought before that period - if they can be included.
     
  3. KenG

    KenG Member

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    You have to file every year regardless of income when you're an adult. and if you were getting a stipend that should've been reported. If it was pretaxed as you say the issuer would've had to report what you were paid and taxes deducted to the government.. Fed Taxes kick in after the basic exemption amount of approx 11k and your income determines things like gst rebates and how your cpp for retirement is calculated.
    This is what flagged you, no traceable means of income so now their looking for how you managed to live and assume you're cheating on your taxes.
     
  4. vortexxxx

    vortexxxx Member

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    I was misinformed about filing every year if I had under a certain amount of profit, but as they say, not knowing the law is not an excuse. A friend who also had been struggling told me he just read the thing about not having to file if under a certain amount after I told him my situation, but he may have misread it. My mistakes include not starting a new PayPal account under my name ( but who is to say the government won't ask for those other files in the future). A big reason I didn't do it was that I knew it would be very complicated and I thought I would screw up proving my losses or they may just disregard that. It is my fault in many ways. The biggest transactions were for gear though, so maybe if I can show my losses in that alone it might offset the other stuff. I kept almost all my receipts too from the last number of years and I have to find what I can use if anything from there.

    The biggest reason i decided to post about this is to let others be a bit careful. Government doesn't understand things we call GAS and such. I actually heard about the CRA cracking down on some Kajiji sellers who sell a fair amount of things, so it was inevitable. Considering they have caught some rich people hiding millions offshore, I'm just a small fish.
     
  5. Jabby92

    Jabby92 Member

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    This whole thing about gains/losses makes no sense in my head. You're not selling stocks here, you're selling guitars and gear which is totally different form of transactions. I can't say for sure but I don't think this will get settled like you think it will, and the whole offset your gains/losses I don't think is the case with gear in regards to taxes/income. In other words, you may not necessarily owe taxes on all your purchases, but I'm willing to bet they will want something for all the sales of gear you have made at least some where among the heap.
     
    Johnny Alien likes this.
  6. Declassified

    Declassified Member

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    it actually seems the problem is not filing taxes - not gas. this is 100% on you. Don't make excuses.
     
  7. AllTheFuzz

    AllTheFuzz Member

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    Certainly not a tax expert, other than my annual experience of having to pay my share to the CRA...but here are the things that stand out to me (some of which may have been mentioned by other previously). I'm not saying what I list below is fact - more like these are areas where I suggest doing more investigation:

    - I believe you do indeed need to file your taxes with CRA each year, even if you're below the "basic personal amount" of income. The amount you of taxes you have to pay should be $0 if you're below that amount, but I don't think that exempts you from having to file your taxes at all.
    - You may still meet the requirements to have to pay CPP premiums
    - I'm not sure if the $30,000 revenue limit for charging GST/HST includes or excludes international sales. While you don't need to charge GST/HST to international customers, if the $30K threshold does include international revenue (note that it's revenue and not profit), you may need to be collecting GST/HST on Canadian sales. Once again, not sure if international sales are included in the threshold, but worth confirming
     
    Declassified likes this.
  8. Borg20

    Borg20 Member

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    So just wondering what CRA wants from you besides an audit? Sounds like you did not file your taxes. You have to file your taxes every year without fail. Are they claiming you own back taxes on revenue from your online sales ? Just tell them you are not a business.

    I think an accountant should be able to sort this out for you.
     
    Last edited: Aug 13, 2019
  9. thiscalltoarms

    thiscalltoarms more gadgets than Batman. Gold Supporting Member

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    Yeah, you're in it deep. I'm sorry. Mojo sent.
     
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  10. Brian Johnston

    Brian Johnston Member

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    Not sure if this was mentioned... if you have your Paypal records, e.g., SG guitar sold for $1000, then get a store listing for the same guitar, e.g., Sweetwater SG $1200. This would show a $200 difference. Who keeps a receipt of a guitar that you no longer have? I don't.
     
  11. KenG

    KenG Member

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    I think if the OP files proper returns for the years missing it'll go a long way to clearing things up.
    That being said a few years ago I heard about the CRA going after a guy in Quebec becuase he played the lottery and gambled so much they were looking at declaring it his primary source of income. Since Lottery winning here are tax exempt in law it may have been gambling but who knows.
     
  12. Jollyb

    Jollyb Silver Supporting Member

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    want to buy a les Paul? Nobody makes money on Gibsons.........
     
  13. Smgbad

    Smgbad Supporting Member

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    Typically, Paypal only counts good and services payments towards the total that could potentially be reported. Gifted money (as you would do in any Craigslist-based face to face transaction) does not count toward the reporatbale amounts... In other words, Ithink you're probably safe there.
     
  14. gulliver

    gulliver Supporting Member

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    I live 10 minutes from the border, I'd be happy to smuggle you (and your gear) into the U.S. Although, I'm not sure how the U.S. immigrations laws work, it's never reported in the news media. :D
     
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  15. odourboy

    odourboy Member

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    Have they suggested how much they think you owe? I've never been in your position, but if I was, I'd be tempted to just pay to put it behind me and save the hassle and expense of a protracted fight (unless it would financially ruin me obviously).
     
  16. DTuned

    DTuned Member

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    It might be a good idea to stop posting about this anywhere on social media, since you're creating a record that could be viewed by the government. It might not seem like you're saying anything that could be used against you, but if you're not a tax auditor it might be hard for you to know. In U.S. legal matters, anyway, you can be compelled to turn over even non-public social media statements. Good luck.
     
  17. Droliver

    Droliver Member

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    Does Canada make you charge sales taxes on those transactions? Even if you were losing money, you may have still had taxes to collect or remit on each transaction, particularly if your PayPal was considered a business account
     
  18. Grasley

    Grasley Member

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    So when you take down an add on kijiji and it asks if you sold the item etc... you just put down " decided not to sell".....
     
  19. Grasley

    Grasley Member

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    Buyers responsibility to submit taxes due..... i live in a province(state) that charges less tax than the province next to me. Everyone comes across to buy all their stuff and only pay the lower tax.....signs all over the place saying that its up to the buyer to remit all correct taxes
     
    Last edited: Aug 13, 2019
  20. Borg20

    Borg20 Member

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    If you own tax money from when you had a business you can declare a loss for year each in business but after 3rd consecutive year CRA starts to wonder what's up and why your business is still losing money after 3rd year in operation. Make sure you keep receipts every time you buy something. You can declare 1/3 of utilities (hydro, heat, cell phone, computer) if you're working out of your home. Get a bunch of receipts that adds up to more than you sold. Declare a loss, pay $0 taxes.

    As for your personal income tax, you should not have charge or remit GTS/PST if you sold less than $30k. If you sold more than $30k better to record the sales as business sales.
     
    Last edited: Aug 13, 2019

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