Q.I make a few bucks from my hobby. Do I have to declare this income?

According to the Canada Revenue Agency “a business is any activity that you do for profit”. The defination further says that a business includes a profession, a manufacture, a trade, an adventure or concern in the way of trade and an undertaking of such kind. If you are selling any product or service that’s definitely an activity for generating profit.

The authorities doesn’t care for the amount of products you sell or even that you take the particular activity as your hobby, they will consider it as your business so whatever money you make from your hobby will be seen as your business revenue.

In this situation you will have to report the income you earn from your hobby by completing Form T2125(Statement of Business or Professional Activities) included with the T1 income tax package.

Q.How long do I have to keep my business records?

You need to keep your business records for six years for the taxation purposes. It is stated by the Canada Revenue Agency that "if you file your return on time, keep your records for a minimum of six years after the end of the taxation year to which they relate".

If you have filed a tax appeal or objection the Agency also cautions that you keep your records until the problem or issue is resolved, and until the time limit has expired for filling any further objection or appeal(which means keeping records for a specific accounting period longer than 6 years).

Please note that you need a written permission from the director of your tax services officer if you want to discard your business records before the minimum period i.e. 6 years is over.for this purpose the T137 (Request For Destruction of Books and Records) is used.

Q.How is an Internet business taxed?

The Canada Custom Agency collects the income tax based on the form of the business not on the way the business operates (not merely income tax, this rule applies on all the other taxes. Likely other business an internet business also has to register for taxes like GST and PST if applicable). Now if your internet business is a sole proprietorship you will report your business income like all other sole proprietor businesses i.e complete the Form T2124 (Statement of Business Activities) or Form T2032 (Statement of Professional Activities).