This shouldn’t come as a surprise but when you do your annual income tax, you have to declare all your business income. Whether customers pay you by cash, cheque or credit card, it doesn’t matter. You have to report it all.
Business income from customers in other countries must also be declared on your Canadian income tax.
A few months ago, Canada Revenue Agency (CRA) sent a federal court order to payment processor Square Canada to turn over information on all its Canadian sellers who annually processed $20,000 or more anytime in the past five years.
According to The Globe and Mail, this is “part of an ongoing effort by the CRA to crack down on tax avoiders.”
In the USA, this has been happening for many years with Square, PayPal and all other third-party electronic payment processors. Every electronic payment processor in the US has to report to the Internal Revenue Service anyone whose payment volume annually exceeds $20,000 and 200 transactions.
The CRA is very concerned about self-employed people and those who get paid in cash. Always keep proper invoices, receipts and bank statements that can prove your income and expenses.
