For Sale Taxes for Domains - The Canadian Way!

[theinvestor]

If people could post how they are doing their taxes it would be well appreciated.

Is it possible to do Domain Investments as Capital Gains?

If so, Can you still expense the yearly renewal fees?

Please post any valuable info.

Thanks.

 

[stock_post]

That would a nice help.
I don't have sales, only purchases.

 

[onlinestoreca]

For a business, if you are using the domains to drive traffic to a website, I see it as advertising, which is an expense.

The names are not yours and have to be renewed every year or you lose them, so you can't really consider them an asset.

It's a little strange because even though the names aren't really yours, you can sell them. I guess you are selling the rights to the names. Which sounds even more like advertising to me.

For personal, I think you would have to consider it an investment and keep track of the expenses of purchasing and renewing the names. Then claim a capital gain or loss as each name is sold.

-jmho

 

[theinvestor]

So essentially it would work similar to stocks?

Except you still have to declare your yearly expenses associated with it.

 

[Ilze]

I run the domains that I pay small amount for as expenses...advertising...since I use them to drive traffic to a ppc site. My advice is to stay away from the word "sales" anywhere in your tax return. There is a huge difference between a domain that you pay 60 bucks for at Pool vs a domain you just purchased for 3k or more. Because there are no tax laws in place yet in Canada, and not even the U.S., it is best to
find a good accountant and be consistant, and be prepared to defend your tax position. Of course, it is better to have every domain seen as an immediate expense...and not an asset. The renewals are always expenses. Again, a good accountant who will go to bat for you, if and when you get an audit, is key. The govt just wants their tax cut, so always pay your taxes...and sleep well at night

 

[theinvestor]

Queen i completely understand that...that's what i am doing...but i thought it should change this year.

For example :

You purchase Domain.com for $5000. You expense in 2009.

In 2010 you sell Domain.com for $10,000. So now i have to pay tax on the 10,000 and not on the difference, since i expensed it.

Am i making any sense? Are you saying it's better to just take the expense that year?

 

[Ilze]

pm please

 

[TheLegendaryJP]

Queen i completely understand that...that's what i am doing...but i thought it should change this year.

For example :

You purchase Domain.com for $5000. You expense in 2009.

In 2010 you sell Domain.com for $10,000. So now i have to pay tax on the 10,000 and not on the difference, since i expensed it.

Am i making any sense? Are you saying it's better to just take the expense that year?

Your gain is $5000, you should declare an income/profit/dividend whatever avenue you take of $5000. Can you imagine if we all paid taxes on our gross without subtracting the initial invest, god help us lol


You had to invest to gain, this is not an hourly wage with no investment.

 

[stock_post]

Queen i completely understand that...that's what i am doing...but i thought it should change this year.

For example :

You purchase Domain.com for $5000. You expense in 2009.

In 2010 you sell Domain.com for $10,000. So now i have to pay tax on the 10,000 and not on the difference, since i expensed it.

Am i making any sense? Are you saying it's better to just take the expense that year?

I see that an Yes you have to pay tax on $10,000.00 if there is no other expense in 2010.
if you have say $5000.00 expense in 2010
you pay the tax on net income.. $5,000.00
(not the revenue)

That is the way I see it.

 

[DanB]

For example :

You purchase Domain.com for $5000. You expense in 2009.

In 2010 you sell Domain.com for $10,000. So now i have to pay tax on the 10,000 and not on the difference, since i expensed it.

Don't know if it's the right way, but that's exactly how I do it.