Canada How to add total net income properly?


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So let’s say that I would like to apply for the response benefit in Canada to the virus and a criteria to be met is an individual needs to have made $5000 minimum in last 12 months.

In theory, let’s say I have made $2000 of earned income. Is it possible for me to declare the difference of $3000 as self employed income from (for example) selling items on Craigslist, marketplace, kijiji? Thus making me eligible?

This would be filed for the 2020 tax year.
 
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Werner Reisacher

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Theoretically earned income is not realized income and therefore not an issue for tax purposes.
 
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You calculate Net Income in the following manner:

Net Sales - COGS = Gross Margin
Gross Margin - SG&A = Operating Expenses
Operating Expenses +/- Non operating gains and income/expenses and losses = Continuing Income before tax
Continuing Income before tax - Tax = Continuing Income after tax
Continuing Income after tax +/- Discontinued operations (net of tax) = Net Income
 
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Werner Reisacher

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Totally correct - provided - that all transactions actually took place and are supported by documentation.
Usually, people post questions to get answers to a problem they - or one of their friends - don't know how to handle. To me, you questioned whether the gap between actual income and the minimum required to qualify for a program could be closed - in theory - with income that could have been generated by selling on xyz's websites. Therefore I tried to politely caution you not to create "theoretical income" for a real-life application. Sorry for the inconvenience caused.
And by the way, if somebody is regularly selling items on the internet, such income is taxable. And reporting it under Schedule C as a sole proprietor is an advantage since he can deduct the cost and expenses related to the sales transaction. There is however a fine line when it comes to selling personal items. As long as you are just selling used personal property such as a computer, furniture, you can assume that the cost of the item equals the price you sold it for. When you start trading - buying items and selling them commercially - the valuation methods come into play and those sales must be reported. A very interesting niche in that market are "collectors". In general, you can sell your used car online without generating a profit. However, if you are a collector who buys cars as collector items, hangs on to them until their value increases, he is considered a commercial trader and fully taxable. Since those items are usually high in value, it is preferable that such people operate under the legal and financial protection of a legal entity.
 

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