Fishing For Dollars

If your photography business uses PayPal then you should’ve received this notice:

PayPal must give the Canada Revenue Agency (CRA) all your PayPal business information. This includes all your transactions between January 1, 2014, and November 10, 2017. People with personal PayPal accounts are not included.

Clearly this is a fishing expedition. The CRA is casting a wide net to find tax cheats.

This is not new for Canada. Earlier this year, the CRA ordered Square to turn over data on its Canadian users who processed more than $20,000 between 2012 and 2016. What’s different this time is that PayPal has to report on all Canadian business users no matter what the dollar amount. One might guess that the $20,000 threshold, which is also used in the US, was too high for the likings of the CRA.

The CRA knows that some businesses don’t report all income especially cash payments and foreign payments. But remember that the CRA can access a lot of your financial information. You might be surprised at how much the CRA knows about you. So don’t cheat on your taxes!

Unless you make a ton of money, in which case you probably have a secret offshore account, there’s little reason to cheat. Self-employed photographers have many potential deductions. But be very careful with these deductions. The CRA knows what the average photographer earns and what the average deductions are.

With more and more people starting photography businesses, especially part-time businesses, it’s only a matter of time before the CRA decides to target freelancers just like it did a few years ago when it went after waiters and waitresses.

Of course it’s easier to go after the little guy, like self-employed people, than it is to go after the millionaires and billionaires hiding money in offshore accounts. The (unreported) tax to be gained from small, self-employed businesses is estimated to be small (tens of millions of dollars) compared to the tax to be gained from offshore accounts ($6 billion to $7.8 billion per year).

Added November 27: The CRA is now targeting wealthier neighbourhoods.

 

Please check the date of this article because it contains information that may become out of date. Tax regulations, sales tax rules, copyright laws and privacy laws can change from time to time. Always check with proper government sources for up-to-date information.

 

Fishing For Dollars
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