Does an E-Commerce Business Have Any Tax Implications?

e-commerce business and tax implications

For quite some time many online business owners felt that the Canada tax rules and regulations were not applicable to their online business dealings.   The CRA never lets anything go past that could possibly generate tax revenue, and of course it didn’t take long for them to start to get some specific regulations in place to govern this.

Basically you have tax obligations concerning your online business the same as you do for any other business.   It is also a misconception to think that online business is minimal.   It is reported that in 2012 that Canadians alone spent $18.9 billion online, and it is quite right to think that this form of business only grew more during 2013.   It doesn’t necessarily mean that all of this shopping was done through Canadian businesses as the web is world wide.

Also, the CRA has made it very plain that if you are making money even off of a web page, that you must follow the regulations concerning this, and it is not just restricted to a booming E-commerce site.

The tax department has been quite extensive in making sure there are no tax loop holes for online business.   They make direct reference to electronic commerce which encompasses retail transactions that can occur via telephone or fax, plus credit cards as well as other modes of payment.

Not only do you have to consider the standard income tax laws, but the other applicable laws like those that relate to export.   Basically if you were conducting on land business that entails shipping abroad then you would require an export licence and the same is applicable to your online business if you are shipping abroad.   It is really important that you understand the import-export laws.   You should discuss this with your business accountant.

Even if you are only running a online business that is generating income for you it is important that you use a good small business accountant to assist you with your tax dealings.

Keeping records regarding your internet business is just as important when doing an online business.   If you are familiar with the tax obligations for a on land business then you will have some good guidelines to follow for your internet business.   A lot of people are now using electronic methods for keeping records and there are even guidelines that the CRA has put into place to follow for this.

Staying compliant with your business tax obligations is a responsibility that you as a business owner whether it is on land, online, or both is something you must strive to do.


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Sam Seidman, CPA, CA, LPA
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Toronto, Ontario
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Chartered Professional Accountant, Chartered Accountant, Licensed Public Accountant


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