For Sale Canadian Tax for Domainers Needed

[cashboy]

what would you do with a 10k domain purchase?

 

[RatherGood]

1 sale of a domain a year? where did this number come from just out of the air? and relative when being compared to who, sedo? I think what makes you the MOST MONEY is considered your core business...not that you have to have a "core"...we all have different sources of money and they are taxed differently from what I know..if you buy a name for 25k and sell for 50k you made 25k, spent 25k simple math folks..

"Core business" is not a monetary percentage of income, or what is rational to the average person; it's what is legally defensible. Sadly, its not a matter of "simple math" as expressed by an American with no Canadian GAAP, taxation or accounting experience on a message board.

Thanks for all the input. Quite a lively topic!! I am incorporated and
the total income from the business is ppc. Not selling domains. I learned early on not to even mention the word sales when talking taxes. It puts the domains in an automatic asset mode. I have read quite a few forums on this subject and it seems that there are no concrete laws, even in the U.S. What I would like to find is anyone who has been audited and stood the test of the Canadian taxman. I think the idea of putting the domains in the Advertising category is brilliant. An advertising expense...to direct traffic to landing pages. The question is....Is a 35k domain an expense? Most accountants I think would be uncomfortable with that. Is a 10k domains an expense? Do I go the "expense" route, which is the best for me,...and wait to get audited? Then, pay the piper in penalties and fees? God, the accounting nightmare is giving me a headache. ...I am counting the sales of the occasional domain as income.

So,...anyone been audited yet?

The tax authority will treat it in any way that results in the highest tax rate. Not what is fair or "right".

Concrete rules and guidance come from tax court precedents. The Canadian "big dogs" are offshore, so its not likely you will see any cases which means no rules or guidance any time soon.

Keep it very simple and use a chartered accountant if you can afford one. At least if a CA gives you bad advice you have recourse against them, but they usually keep clients out of trouble anyway.


As far as audits go, remember they come after several years of operation to maximize the interest and penalties. They don't express their objections to your accounting methods right off the bat.

 

[Focus]

Sadly, its not a matter of "simple math" as expressed by an American with no Canadian GAAP, taxation or accounting experience on a message board.

Not simple math to a canadian eh? lol

ok....good luck

 

[cashboy]

My accountant wants to play it safe, at my expense..( no pun intended LOL)
She called Rev Canada and no one knew what to tell her, until she ended up with a
supervisor...who then quickly said..and I mean ...too quickly...that all domains are
Capital Expenses. Period. That is total bs. When my accountant pressed Rev Canada
for clarification re money, i.e. a 12 dollar domain purchase vs a 5k purchase, vs, 25k purchase, the supervisor insisted all domains were taxed the same and would not clariy. Again....Calling Rev
Canada is a waste of time. Now, my accountant thinks that they are right. There is no way I am taking renewal fees, small drops, etc...and putting them into assets. Sometimes I drop a domain after 12 months because there is zero traffic. So, Cancellations are important to keep to explain the world of ppc. I asked advice from one of the "big boys" and they said their accountant calls them all Capital
Assets. The big boys do not really do businesd the way we do..,.so once again, ..I think it all depends on how each individual "uses" the domains. So, right now, I am back at square one....I am going to call them what makes the most sense...Expenses, advertising, and taxing the ppc and occasional sale as INcome, and putting the very large sales into a Capital Expense category, under "Website" developement.
The best of both worlds, that makes sense to me.

 

[Ilze]

I have quite a bit of income from "settlements"...which I classify as income...and not domain sales. Those C and D's are often income generating.

 

[TheLegendaryJP]

Queen Mum eh

 

[Daem0n]

C&Ds can be filed as income? I never knew this. Not that I have any C&Ds...but I could see that being a lucrative business. Setup a bunch of corporations and start looking for people to send C&Ds to. Hmmmm...interesting.

 

[Ilze]

C&Ds can be filed as income? I never knew this. Not that I have any C&Ds...but I could see that being a lucrative business. Setup a bunch of corporations and start looking for people to send C&Ds to. Hmmmm...interesting.

"What I meant was that I will have a domain...say...Jones.ca....and I get a c and d from Jones Investment...saying I am infringing...bla bla...My tm lawyer sends them a response telling them about MY legal rights. In 99 per cent of cases, I get a letter offering to purchase the domain. As far as taxes go, it is all income, but I set up a special column with these as legal agreements....thus selling to avoid further legal
action. My company is set up as a ppc advertising company, and not one as engages in sales of domains. Selling of domains really classifies them all as inventory-assets, according to many opinions.

 

[Daem0n]

Hmmm even more interesting information. I wouldn't have thought that many companies would offer to purchase a domain - at least not for more than the registration amount.

 

[Ilze]

it does not matter what they want to offer...it matters what I want to do...
As I said, I have a tm lawyer protecing my interests. Also, please keep in mind the costs involved with litigation. If you are the recipient of a c and d for an out and out blatant tm infringment, i.e. MicrosoftWindows.ca...just do the tranfer...but if you own a domain that is considered generic.....well, that is for another forum. Legals and c an d.