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.
According to the schedule, income from webpages or websites includes:
Corporations (Schedule 88) and unincorporated businesses (T2125) must report the following information on:
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 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.
