For 2013 and subsequent taxation years, corporations will be
required to disclose the income earned from any web pages or
websites they administer. The percentage of the corporation's
gross revenue generated from the Internet must be reported on the
recently released Schedule 88 for T2 Corporation Income Tax
The CRA identified several situations that may suggest a vendor
earns income from web pages or websites:
The vendor sells goods and/or services on a website. The vendor
may provide a "shopping cart" and process payment
transactions, or use a third-party service to process
Customers call, complete and submit a form or email the vendor
to make purchases, orders, bookings, etc.
The vendor sells goods and/or services on auction, marketplace
or similar websites operated by others
The vendor earns income from advertising, income programs or
traffic that a site generates. For example:
static advertisements placed on the site for other
advertising programs such as Google AdSense or Microsoft
The CRA also noted that taxpayers are required to file Schedule
88 if they have created a profile or other page describing their
business on blogs, auction sites, online marketplaces or any other
web-based portal or directory that generates income.
The form requires corporations to indicate the number of
websites that generate income, provide the addresses of the top
five websites that generate revenue for the business and list the
percentage of gross revenue generated from Internet activities.
This information must be tracked on an ongoing basis to comply with
Currently, Schedule 88 is not available with commercial
corporate tax preparation software. It is unclear whether the CRA
will require corporations to paper file this form separately, since
it is not available for electronic filing. It is also not yet clear
whether corporations that have already filed their 2013 returns
will be required to go back and complete this schedule.
There is an identical reporting requirement for individuals on
the T2125 Statement of Business or Professional Activities schedule
that is part of the 2013 T1 Income Tax and Benefit Returns. This
requirement is part of the current T2125 form and should be
completed when filing 2013 T1 Income Tax and Benefit Returns.
These new reporting requirements appear to be very broad in
their application. We are hopeful that the CRA will provide further
guidance as to how they may affect taxpayers.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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