The records of Canadians who use PayPal business accounts to make and receive payments will soon be in the hands of the federal government鈥檚 tax-collecting agency.
The online payments company said Wednesday it has been given 45 days to hand over information identifying its account holders and the amount and number of payments they paid or received between Jan. 1, 2014, and last Friday to the Canada Revenue Agency.
鈥淲e are required to disclose information about business account holders who have received or sent a payment,鈥� it says on its website. 鈥淎ffected account holders have been notified.鈥�
CRA spokesman Patrick Samson confirmed that the agency received Federal Court of Canada authorization to request the information, part of a crackdown on Canada鈥檚 underground economy.
鈥淪pecifically, the CRA is seeking PayPal鈥檚 list of Canadian clients who have a commercial account, including the total value of their transactions (purchases and sales) from 2014 to the date of the requirement,鈥� he said.
鈥淭he information obtained through the unnamed persons requirement will allow the CRA to ensure that these individuals and corporations comply with their tax obligations under the Income Tax Act.鈥�
PayPal Canada says it has more than 6.4 million active users, although that includes personal accounts which are not affected by the CRA move.
Hussein Warsame, a tax professor with the University of Calgary鈥檚 School of Public Policy, linked the data grab to the federal government鈥檚 2017 budget, which provided a five-year funding boost to the CRA to fight tax evasion by investigating the underground economy.
鈥淭hey think people who use PayPal are probably avoiding tax and therefore they鈥檙e using the extra funding to basically look for low-hanging fruit,鈥� he said.
鈥淚t is a fishing expedition, in many ways.鈥�
He said the agency is likely offering the 45-day window to allow people who haven鈥檛 paid their taxes as required to file tax revision forms and come back into compliance with the tax act.
Warsame said the files could allow the CRA to identify people who have had more than $30,000 in business revenue over 12 months, which means they should be registered to collect and remit the GST.
It also may identify people or corporations who owe corporate or personal income taxes. If caught, they will have to pay the tax, plus penalties and interest. If the tax avoidance is deliberate, it could be considered tax evasion and result in a criminal charge, he said.
He said Canadians are required to retain tax records for six years and recommended that PayPal customers pull together their records to prepare for potential audits.
Dan Healing, The Canadian Press
