Canadians who make a habit of selling goods on eBay should brace themselves for some attention from the tax department

CBC News

The Canada Revenue Agnecy has won the rights to examine files of the auction site's so-called "power sellers" - those Canadian who generate at least $1,000 US a month in billings from their online sales. The tax department wants to know if these big sellers are declaring their eBay income. A recent Federal Court of Canada decision affirms an order last year that requires eBay Canada to provide tax officials with full account information on these sellers, including their name, user IDs, mailing addresses, billing addresses, phone numbers, and e-mail addresses.

The order applies to any Canadian individual or business who had power seller status in Canada at any time during 2004 and 2005. EBay Canada lawyers had argued that the computers that housed the information were located in California. But under questioning, eBay lawyers acknowledged that the information was easily accessible in Canada by its Canadian operation.

"The reality is that the information is readily and instantaneously available to those within the group of eBay entities in a variety of places," wrote Mr. Justice Roger Huges of the Federal Court of Canada. "It is irrelevant where the electronically-stored information is located or who as among those entities, if an, by agreement or otherwise asserts 'ownership' of the information."

Mr. Justice Hughes noted that the Income Tax Act permits the Canada Revenue Agency to carry out somewhat of a fishing expedition. "The wording of subsection 231.2(1) is very broad; it enables the minister to require 'any person' to provide 'any information'," he wrote. "The only constraint is that the request must be made 'for any purose related to the administration or enforcement of the Act'."

But eBay Canada lawyers said the government had failed to show sufficient evidence that the tax agency was carrying out a "genuine and serious inuiry" into power sellers, as a previous court ruling had required. Hughes reserved judgment on that part of the case, pending a later hearing.

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The above was an official report as of September 27th 2007; if this article was useful for you please take 2 seconds to click on the "YES" button so that order eBayers will be aware of this!