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 Replies: 32 / Views: 8,032 |
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Pillar of the Community
Canada
1192 Posts |
@doubleeagle59 that is correct. Although as @kuh_85 said there may be some benefits to you having a GST number. It would be worth looking at the numbers. It very likely might be as you'll get to claim all sales tax paid on items you buy for resale, plus have write off potential for various expenses involved (fuel, mileage, "office space", supplies, etc)
@coinsarecool Just keep records of your purchases and sales. Report any profit being made as income. You don't need to file for a GST number or collect sales tax.
As always, I am not an accountant nor a tax specialist. Please talk to your own accountant / do your own due diligence in researching your tax obligations.
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Pillar of the Community
  Canada
5394 Posts |
One of the CRA definitions of a business is " an undertaking of any kind" . Let's face it ..... at any coinshow, collectibles show , Flea market , on ebay , Craigslist, whatever there are MANY under the table people who are not declaring income derived from their sales. Try asking for an invoice , the resulting conversation borders on the absurd to the irrational. I would absolutely guarantee that these "upstanding individuals" that you see at show after show , year after year, could not find the "Other Income " or " Business Income" box on their Tax form. Yet they all want free Medical care , nice roads, great social benefits etc. Do the right thing. |
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Pillar of the Community
Canada
1984 Posts |
Kuh,
Thanks for that. Will look into it.......
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Pillar of the Community
Canada
1505 Posts |
Interesting, I am not sure if it is worth the effort for me. Let's assume I: Sell $5k/year ebay takes 10% = $500/year in fees GST in BC @5% = $25 The amount paperwork I have to file/track increases. I currently claim my profit as "Listed Personal Property" for tax purposes, coin collections fall into this area if you sell over $1000 in value (not profit) per year. If you are over the $10k/$30k threshold in BC it might be worth it, but I am not seeing the cost/benefit of doing all the extra paper work. Maybe my average margins are too low, but it just sounds like an increase in cost of business. |
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Pillar of the Community
Canada
2495 Posts |
purelywasted............I totally agree.
If you're under the threshold, why create more paper work?
But just to be clear, if you're over the 30K selling limit (in ONT) you must have an HST registration and charge HST on your sales.
You don't have a choice.
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Pillar of the Community
Canada
1461 Posts |
Having a store (a physical one and ebay), I'm faced with pretty much yearly audits. One reason why coin and bullion dealers get audited frequently is not only because of "cash dealings" implications but also a large discrepancy between sales numbers and HST collected. That's because many dealers sell pure 999 product or ship a lot of product down south, and because both are tax exempt, the numbers look skewed. The sales tax is being implemented because ebay is choosing to register individually in each country of operation and therefor subject to tax laws. Personally I wish that the Canadian government would get rid of the 30K threshold as it's extensively abused and creates an unfair advantage for many businesses. |
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Moderator
Canada
10458 Posts |
Quote:Question. So say I sell $3,000 CDN/year worth of coins on ebay, do I need to do anything with regards to taxes? Yes, claim $3000 as "other income" on your annual taxes.... "Discovery follows discovery, each both raising and answering questions, each ending a long search, and each providing the new instruments for a new search." -- J. Robert OppenheimerContent of this post is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License. See: http://creativecommons.org/licenses...0/deed.en_USMy eBay store
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Valued Member
Canada
299 Posts |
Claiming $3000 as other income is only after you have subtracted your original coin/banknote costs + ebay & paypal fees. Yes? |
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Valued Member
Canada
395 Posts |
Yes claiming $3000 as other income would have to be your net profit. Where as the GST/HST registration limit is based solely on gross revenue very easy to reach that number.
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Pillar of the Community
Canada
5394 Posts |
To clarify @TheCoinhunter... there is a big difference between EXEMPT and ZERO RATED GOODS for the purposes of
GST/HST. You cannot claim ITCs on exempt goods only on zero rated goods. As you stated earlier 999 bullion and Exports are ZERO RATED thus you claim ITCs on those.
When I applied for a new GST number for our current business , the bureaucrat in Winnipeg asked exactly we were doing .
I said mostly exporting to the US and other countries and to make a note that over 80 per cent of our sales were to that efffect.
So far so good. We have started as of the first of this year keeping additional copies of our CPB7533 US Homeland Security import forms in to the US from Canada for locktite proof of our exports. Best to be proactive than scrambling around when the inevitable "Pencil Pusher " comes a calling!
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New Member
Canada
39 Posts |
If you sell $3000. worth of coins in a year , you do not have to record that as income on your taxes. The way I understand it, and I just went over all this with my accountant last week is,,, If you buy and sell a coin for under $1000. there is nothing to report. It's considered personal property. Ex. buy for 600. sell for 800. you do not have charge GST, HST, or even claim the profit. My understanding is: If you buy and sell a coin, buy $600. sell $1200. Then you have to report above 1000. as capital gains. So 200. bucks. and then that even gets taken down more, I think 50%.,, so really , the taxable income is $100. Not including any fees, like ebay, and paypal that could reduce your net profit. And I think you are taxed at your income level rate. If you buy a coin for $1800. and sell for $1500. then you can claim a capital loss, against any gains. If all your coin purchases are under $1000. and sales under $1000. and the amount of transactions very low, then its not considered a biz. If you have many coins, and are selling many, (I Don't know how many is many) then CRA can consider it a biz, in which you have to charge GST and perhaps PST. If you are selling over $30k per year , then GST is required. I too had plans on selling under the 30k mark, without charging GST, until I met with my accountant. The advantage of selling coins without charging taxes, does hurt the legitimate coin sellers with an unfair selling target. ex. $1200. or $1200. + TAX One should keep all the receipts of coins purchases. You never know when a hobby can turn into a home based biz. A separate bank account, separate visa card makes is easy for any bookkeeper to properly keep track of it all for you, should you decide to go into biz. If you're gonna do it, might as well do it right. Cashless society coming, and everything will be traceable at some point. |
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Pillar of the Community
Canada
3234 Posts |
Quote:
Yes, claim $3000 as "other income" on your annual taxes.... Quote:
If you sell $3000. worth of coins in a year , you do not have to record that as income on your taxes. I really don't get why we are seeing completely opposite "expert opinions" here.. One accountant has his expertize added here and then we kind of see opposing "opinions". Are all of these opposing statements based on facts ? |
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Valued Member
Canada
395 Posts |
It's not exactly opposing statements just different situations. 1947ML is describing selling $3000 dollars worth of coins, that's revenue, considering ebay fees even if you paid nothing for the coins that would not equal $3000 net profit(the net profit is all that matters in taxation except for the sales tax). Everything he says is correct with the $1000 limit as well as the claiming the capital losses, this is because coins and the like fall under the category of listed personal property(LPP) and losses can only be claimed against other LPP. The problem with this is that is for individuals. The question as it stands is when do you become a business and is the only false statement 1947ML made("If all your coin purchases are under $1000. and sales under $1000. and the amount of transactions very low, then its not considered a biz." ) this is simply not true as there is no set transaction limit, revenue amount that can tell you this, it is left as vague wording so that people do claim amounts and pay taxes. Incase you didn't know CRA defines a business as "an activity where there is a reasonable expectation of profit and there is evidence to support that intention". Registering for GST/PST/HST is different in the fact that there is a clear set limit on revenue in which you need to be registered for. The key for any of this is keeping good records, whether you have a tax program or an accountant both can easily walk you through this if you have all your information available. Honestly nothing here is very complicated it's just very dependent on your individual situation. A person who made $3000 net profit on $4000 revenue is in a completely different situation then a person who made $3000 net profit on $27000 revenue as one is clearly more likely considered a business then the other. Hope this clears things up a bit and I will leave with a small example for an individual as I find those more clear. I buy a coin as individual for $800. I later sell the coin on ebay for $1500 on ebay. ebay takes 10%, paypal takes 2.9%+.3 and it costs me $30 to ship and insure. 1500-(1500*0.129+0.3)-30= 1276.2. Because of the LPP limit we would then go 1276.2-1000=276.20 this falls under capital gains so when tax times rolls around you would owe on 276.20/2=138.10. This means whatever tax bracket you are personally in you would pay that percentage on $138.10 |
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Pillar of the Community
Canada
1505 Posts |
I think you are seeing two different ways of doing things, each has its pro's and con's.
Under "other income" you are running it as a small business and are able to make various deductions as a result, there are some added benefits but it does have a little more paper work for deductions that may/may not be worth it.
The other method is using what CRA calls "Listed Personal Property" or LPP (coins, art, stamps, antiques, essentially valuables that usually appreciate), you are supposed to claim any capital gains/loss from any asset sales you do above a certain value. For LPP, any sale less than $1000 does not need to be reported. However there is grey area for what they call "collections", so if you sell all or part of collection that has a value over $1000 you need to report it, whether it is a capital gain or loss (capital losses for LPP can be deducted from LPP gains, unlike regular property like toasters and kitchenware). Some people argue that if you sell to different people and the individual sale does not exceed $1000 you do not need to claim. I interpreted the CRA rules as the total value of sales, not the individual items sold, for example if I put my items in a couple auctions during the year, the total value of the coins sold that year is considered to be my collection, even if no single item exceeded $1000. I would then deduct my costs and end up with a capital gain/loss.
Which is the right path? Part of it will come down to intent and workload, I would argue I am not a business, because the vast majority of my income is not coin related, I keep more than I sell, I don't have booths at any coins shows and I treat it as a collection. If CRA were to audit, they might see it differently and want me to claim my collection as a business. At the end of the day, if you are doing significant volume you should probably spend a few hours talking to an accountant because you don't want to be on the receiving end of an audit.
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Pillar of the Community
Canada
3234 Posts |
The above 2 explanations do help me understand..
....so thanks for adding these extra comments..
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Replies: 32 / Views: 8,032 |
First Page
Posted 05/10/2017 11:42 am
