Most Canadians assume their online income flies under the radar, but the CRA sees far more than you think.
Bank transfers
The CRA can review your bank statements, including all incoming e-Transfers and wire transfers. When you claim low income on your taxes but live like you make double or triple that shown on your return, but have no other assets or source of income besides thousands in your bank account from online transfers, that’s a red flag right there.
Platform reports
Canadian tax authorities now have agreements with big online platforms like Airbnb, Uber, and Etsy to collect information about their users. If you drive for Uber or sell products online, chances are the CRA already has a virtual slip with your name on it listing how much money you made this year.
PayPal records
A lot of people think that if the money stays in PayPal or another digital wallet, it’s invisible to tax collectors. In fact, CRA won a court case a while back that forced PayPal to disclose information about Canadian business account holders who regularly move money.
Crypto exchanges
If you buy Bitcoin from a Canadian cryptocurrency exchange, that exchange is obligated to report any sizable transactions to the CRA. Cryptocurrency might seem mysterious, but to the CRA, crypto is just another commodity, and your money tells a story once it leaves the crypto world and enters your regular bank account.
Social media
Tax auditors have been known to snoop around on public social media accounts. Posting pictures of your new fancy car, tropical vacations, and millionaire lifestyle while filing low-income taxes will give CRA audit officers the evidence they need against you, using your own words and pictures.
Square and stripe
If you swipe credit cards through a digital card reader or accept online transactions through Stripe, those companies track every dollar you transact.
Similar to how your bank can be asked to verify your balances, third-party payment processors store records of how much money passes through their systems.
eBay Sales
Are you selling items online through eBay? The CRA distinguishes between hobby selling and businesses when auditing online sellers.
Based on how often you turn over inventory through your eBay store and how long you’ve been selling, the CRA can identify your online storefront as a business you should have registered.
Foreign accounts
Canada has information-sharing agreements with over 100 countries. So if you have a foreign online bank account, investment account, or anything else abroad, chances are that information was reported to the CRA.
Amazon FBA
Running an Amazon FBA feels like selling online, but the CRA knows when you ship products from Amazon’s warehouses.
Because Amazon collects payments from customers, there’s a paper trail of sales going directly to Amazon. And if you’re caught hiding income from the CRA, they can easily request your sales records from Amazon.
Crowdfunding sites
Money received through crowdfunding websites isn’t always considered taxable income. But it can be, depending on what you use the money for.
The CRA knows who’s crowdfunding large amounts of money on sites like Kickstarter and GoFundMe and they’ll know if you should have been reporting those funds.
Domain registrations
Owning multiple websites or expensive domain names can come up in a CRA audit.
Domain registration companies keep public records associating websites with owners. Auditors can pick up on patterns of website ownership as potential businesses you may not have reported.
App store earnings
Do you sell iPhone apps or video games? If you transact money through Apple or Google, those companies store strict sales records of every download and customer in-app purchase.
Tax agencies routinely acquire copies of the tax documents Apple & Google issue to their developers.
Influencer gifts
As an influencer or online seller, if you’re accepting free products from companies to post about on your page, CRA will count those items as income.
Just because you didn’t physically get paid for that giveaway post or brand partnership, CRA can estimate how much those free gifts were worth to you.
Short-term rentals
The CRA audits more than just Airbnb users. They also look at Facebook Marketplace and local underground rental pages.
If you’re regularly making income through cash rent payments for properties you own or rent rooms in your home, expect trouble if you don’t report that money to CRA.
Spending
If your reported income is $20,000 but your online credit card statements show you are spending $80,000 a year, the CRA will want to know where the extra money is coming from.
They can look at your spending habits to find proof of “invisible” income.
Sources: Please see here for a complete listing of all sources that were consulted in the preparation of this article.