My name is Mark Goodfield. Welcome to The Blunt Bean Counter ™, a blog that shares my thoughts on income taxes, finance and the psychology of money. I am a Chartered Professional Accountant and a partner with a National Accounting Firm in Toronto. This blog is meant for everyone, but in particular for high net worth individuals and owners of private corporations. The views and opinions expressed in this blog are written solely in my personal capacity and cannot be attributed to the accounting firm with which I am affiliated. My posts are blunt, opinionated and even have a twist of humor/sarcasm. You've been warned.

Wednesday, March 19, 2014

Reporting of Internet Business Activities for 2013

The Canada Revenue Agency ("CRA") has been very concerned over the last few years about income tax “slippage” due to Internet commerce. This is a very complicated issue that deals with the location of servers and offshore tax planning.

The CRA has now set it sights on a much easier target, that being income earned from a website or webpage. As of January 1, 2013, the CRA now requires corporations to file Schedule 88, a one-page “Internet Business Activities” as part of their T2 return if the corporation earns income from one or more webpages or websites.

There is a similar requirement for unincorporated businesses on the revised Form T2125 (see Internet Business Activities section) so my fellow bloggers who are sole proprietors or partners in a business are now also caught by this disclosure requirement.

Income from Webpages or Websites


According to the schedule, income from webpages or websites includes:

  • The sale of goods and/or services through a website that includes the processing of payment transactions online
  • The sale of goods and/or services through a website that requires customers to either call, complete or submit a form, send an email to make a purchase, place an order, booking and/or other transactions
  • The sale of goods and/or services through an auction, marketplace or website operated by others
  • Income earned from advertising, income programs or other traffic your site generates

 

Reporting Requirements


Corporations (Schedule 88) and unincorporated businesses (T2125) must report the following information on:

  • Number of Internet webpages or websites your corporation earns income from
  • Provide the Internet webpage or website addresses (URL)
  • The percentage of gross revenue generated from the Internet in comparison to the total gross revenue
The CRA has not clarified to my knowledge if they require the form if the corporation has already filed their 2013 return.

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.