Note: This article does not constitute legal advice.
Many people have side jobs to supplement their income. While some may work part-time as wait staff, some earn extra money by selling things online. Are the earnings from these side sources taxable?
The Income Tax Act* (ITA) has a set of convoluted rules that determines the answers to such questions. Generally, the earnings are taxable if they come from an office, employment, business, property or other source as specified by the ITA.
Therefore, income from a taxpayer’s second job is considered taxable since it comes from employment. Also, the definition of employment is broad enough to catch earnings not paid directly by the employer, such as commissions, tips, and gratituities.
What about money earned from selling online?
Section 248 of the ITA defines “business” as including “a profession, calling, trade, manufacture or undertaking of any kind whatever… an adventure or concern in the nature of trade.”
Therefore, whether the income is taxable depends on whether the activities undertaken can be defined as a “profession, calling, or trade.” If you’re actively purchasing merchandise and reselling it online, the money you make will probably qualify as income. On the other hand, if you’re selling personal belongings, such as old clothing and CDs, it will likely not be caught under the ITA.
*R.S.C. 1985, c.1 (5th supp.)
