A good tax guide for domainers

[Adam Dicker]

It's tax time again. If you are like most domainers, you are a little hesitant about filing your tax return. This is not just because you dread paying Uncle Sam like most taxpayers. It may be because you are unsure of whether you are reporting your domain purchases and sales correctly.

Despite the growth of domaining, it is still a relatively young and small industry that has not yet gained the attention of the IRS. There are no tax laws or tax court cases directly related to the domaining industry. As a domainer, you need to understand your core business and prepare a solid and defensible tax policy that is a) based on existing tax code for similar industries, b) consistent, and c) well documented. Be proactive and you can ease your tax-time worries.

Sandra K. Brooks, CPA is the author of the recently released Domain Tax Guide, which includes a comprehensive analysis of the tax issues surrounding the domaining industry and step-by-step instructions for tax preparation for a domain business.

A good tax guide is like a good lawyer or a good accountant, they will usually end up saving you well more than the fees you would save by not hiring them. This was a decent read for $79.

Domainer Tax Guide

I will be posting a more detailed review on my blog later.

-=DCG=-

[TheLegendaryJP]

One point of interest I was recently advised on was PST.

Who else has been told a corporation is PST exempt on " intellectual property " sales ( domain names ) regardless of the purchasers location even within Canada.

They appear non GST exempt ( unless to out of country buyers of course ) and at this point I feel safer paying it be it collected or not ( on sales to other Canadians ) as you all know adding GST to sales within Canada to Canadian domainers is " taboo " and most of us need to build that into our prices.

Any other in put?

[Adam Dicker]

It is best to collect GST on all domain sales.

From what I have been told that is the correct thing to do.

-=DCG=-

[TheLegendaryJP]

It is best to collect GST on all domain sales.

From what I have been told that is the correct thing to do.

-=DCG=-

Generally, intellectual and intangible property is covered under the definition as a zero-rated supply and GST is not charged for non-resident customers.

All sales within Canada yes but out of country buyers do not believe so (so I am advised) since they are exempt and you cannot collect you are therefore exempt. Different story of course if I sold to you and you are within Canada, resident,business or private citizen. I believe it was discussed among us CAD residents in another dnf thread a while back. I believe DNGeek, Jacksplat. ianccc etc

Interestingly enough Adam, website memberships have been found to NOT be GST exempt in cases where there was content available( downloads etc ).

My accountant was initially wrong assuming ALL intellectual sales were GST exempt even to a Canadian so disregard some of my statements but here is the thread...

http://www.dnforum.com/f356/ca-sales...ad-232946.html

[acronym007]

It's tax time again. If you are like most domainers, you are a little hesitant about filing your tax return. This is not just because you dread paying Uncle Sam like most taxpayers. It may be because you are unsure of whether you are reporting your domain purchases and sales correctly.

Despite the growth of domaining, it is still a relatively young and small industry that has not yet gained the attention of the IRS. There are no tax laws or tax court cases directly related to the domaining industry. As a domainer, you need to understand your core business and prepare a solid and defensible tax policy that is a) based on existing tax code for similar industries, b) consistent, and c) well documented. Be proactive and you can ease your tax-time worries.

Sandra K. Brooks, CPA is the author of the recently released Domain Tax Guide, which includes a comprehensive analysis of the tax issues surrounding the domaining industry and step-by-step instructions for tax preparation for a domain business.

A good tax guide is like a good lawyer or a good accountant, they will usually end up saving you well more than the fees you would save by not hiring them. This was a decent read for $79.

Domainer Tax Guide

I will be posting a more detailed review on my blog later.

-=DCG=-

Wow, that seems a bit pricey, no? Anyway, I will be very interested to read your review of this product before I consider shelling out that sort of cash. I guess I believe there are only going to be a few points of interest in this purchase seeing how we share allot of common knowledge in this indsutry. Thanks Adam.

[BELLC1]

Or ... you could go to Domainer Mardi Gras next month:

Friday, Feb 20, 2009

2:15 PM – 3:15 PM Session 3: Domain Names Tax Risks and Issues

In this session, learn about key tax issues and how they impact your domain name investments including: when you can expense the cost of a domain name; how fast a domain name can be expensed; the impact of the new U.S. president on your domain name income, and PPC income from foreign markets and how it is subject to U.S. taxes.

[2fly1]

3:45 PM – 5:00 PM Session 4: Is the main reason why I would go.

I've been going back and fourth on if to go or not to go. I'm sure it would be a good time but I'm more business focused right now.

Or ... you could go to Domainer Mardi Gras next month:

Friday, Feb 20, 2009

2:15 PM – 3:15 PM Session 3: Domain Names Tax Risks and Issues

In this session, learn about key tax issues and how they impact your domain name investments including: when you can expense the cost of a domain name; how fast a domain name can be expensed; the impact of the new U.S. president on your domain name income, and PPC income from foreign markets and how it is subject to U.S. taxes.

[Acquisition]

Good stuff. Thanks for this.

[Ilze]

I charge GST to on all domains sales...no exceptions. Many of my sales are to companies in the u.s., and all in U.S. dollars. They whine about it, but I tell them that they must pay. Simple. I just got thru a GST audit.

ik

[TheLegendaryJP]

I charge GST to on all domains sales...no exceptions. Many of my sales are to companies in the u.s., and all in U.S. dollars. They whine about it, but I tell them that they must pay. Simple. I just got thru a GST audit.

ik

I can understand being safe but they are exempt. Hey if it works for you

[Ilze]

Who says they are expempt? A canadian buying a dot ca is a Canadian and should be paying taxes. I called Rev Canada and they said that I have to charge GST to everyone. If they are exempt, they will get it back on their end...with their paperwork. If they turn out for some reason to NOT be exempt, then I am stuck with paying the GST. It is not my place, nor do I have the expertise, to decide who is expempt, and who is not...so I charge it always...as I said, no exemptions. Better safe than Sorry.

[TheLegendaryJP]

Who says they are expempt? A canadian buying a dot ca is a Canadian and should be paying taxes. I called Rev Canada and they said that I have to charge GST to everyone. If they are exempt, they will get it back on their end...with their paperwork. If they turn out for some reason to NOT be exempt, then I am stuck with paying the GST. It is not my place, nor do I have the expertise, to decide who is expempt, and who is not...so I charge it always...as I said, no exemptions. Better safe than Sorry.

No one said Canadian buyers are exempt, in fact read what I wrote prior. You stated all sales, which to me suggests out of country buyers who are exempt and therefore YOU are exempt, you cannot be expected to pay on something you cannot collect. Furthermore the day a native ( indian ) buys a name from you Id like to see you bring up GST.

Like I said, if it works for you thats good, otherwise not expected to out of country buyers.

[Ilze]

Jp, If you could please let me know where we do not have to charge gst to "out of country", I would greatly appreciate it. As it stands right now, I have a buyer who resides in Florida, and is buying dot ca domains from me. Are you saying I do not have to charge him GST? If that is the case, that would be wonderful!!
This is why I love this forum...I always learn something

[TheLegendaryJP]

Wait a sec is this a trick question lol

Selling a .CA to florida resident... not possible to avoid GST because firstly the dot ca buyer has to have a Canadian presence to buy a .ca and thus is no longer GST exempt.

I should clarify the difference between .ca and .com say, in this case selling a .ca will always include the addition of GST. So yes ALL your .CA sales should add GST

I have to apologize the .ca makes up such a small fraction of what I do that when I think sales I think .com/net/org.

[Acquisition]

loopholes loopholes loopholes.....

But just win any lottery, or scratch off ticket, or Pro-Line which is gambling on sports (or even gambling at a casino), and you don't have to pay any taxes on your winnings here..

who knew ???

[Ilze]

Wait a sec is this a trick question lol

Selling a .CA to florida resident... not possible to avoid GST because firstly the dot ca buyer has to have a Canadian presence to buy a .ca and thus is no longer GST exempt.

I should clarify the difference between .ca and .com say, in this case selling a .ca will always include the addition of GST. So yes ALL your .CA sales should add GST

I have to apologize the .ca makes up such a small fraction of what I do that when I think sales I think .com/net/org.

Sorry for the confusion....but nice to know that I have not been screwing up LOL

[DanB]

One point of interest I was recently advised on was PST.

Who else has been told a corporation is PST exempt on " intellectual property " sales ( domain names ) regardless of the purchasers location even within Canada.

They appear non GST exempt ( unless to out of country buyers of course ) and at this point I feel safer paying it be it collected or not ( on sales to other Canadians ) as you all know adding GST to sales within Canada to Canadian domainers is " taboo " and most of us need to build that into our prices.

Any other in put?

I live in QC and just called Revenu QC to confirm if domain resale is taxable. They've transfered to 2 people, nobody knows this biz! They have in their documentation the example of domain registration (ex.Netfirms.ca), but nothing very clear on domain reselling.
Anyways, someone is going to do a research and call me back... I will let you know.

[Ilze]

I live in QC and just called Revenu QC to confirm if domain resale is taxable. They've transfered to 2 people, nobody knows this biz! They have in their documentation the example of domain registration (ex.Netfirms.ca), but nothing very clear on domain reselling.
Anyways, someone is going to do a research and call me back... I will let you know.

Trust me...it is taxable. The question is how much....This is why you must have advice from an accountant. Yes, no one know anything in Quebec, Canada, or even the U.S. There are still no tax laws that specifically deal with domains. So, you determine how they should be taxed, i.e. expenses, or Capital assets, depending on how they are used.

Just remember, to err on the safe side. If you get an audit because someone "dropped a dime", and report a sale....i.e. income on your side, you had better prove that you paid tax. Tax is paid on all sales...Rev Canada is even monitoring Ebay for small time repetive sales.

I have had three accountants call Rev Canada...and just like you, got no where. In the end...we all pay for it...either in taxes..or taxes and Penalties and Interest...!!!!!!!

HOWEVER.,..on the other side of the coin would be the occasional sale...which probably would not be taxable...If you are here, and a domainer,...and you are expensing...then you must declare income. If I sell a couch at a yard sale, of course I will not chage gst, or even declare income....it is all about your use, your business...etc...

Hope that helps...

[kamilaseo]

some cool

[Rubber Duck]

Watch out for sedo. They demanded that I produce VAT receipts for buyers in Germany whose identity had previously been kept from me for 3 years.

Of course I told them to stick it where the sun don't shine.