p2pnet news view | Freedom:- Have more than 10,000 Canadians reported everything they earned on eBay auctions?

And who wants to know?

The Canada Revenue Agency.

“The CRA’s investigation has been stymied by eBay Canada because it has refused to turn over information about PowerSellers. The company argued the information was stored on parent eBay Inc.’scomputers in the United States and beyond the reach of the CRA. It also argued the CRA’s probe was too broad and amounted to a ‘fishing expedition’,” says the Globe and Mail.

The Federal Court of Appeal last week dismissed eBay’s arguments saying the company has easy access to the records “with the click of a mouse,” putting them within the bounds of the CRA, according to the story, which goes on:

“It also upheld the CRA’s power to conduct investigations of groups of people to ensure compliance with the Income Tax Act.

“The court ordered eBay Canada to hand over the names, contact information and gross sales figures for the PowerSellers. The company said it will start turning over the material next week.

But, “While this conclusion may be limited to the specific Income Tax Act provision, the concept that the mere accessibility to an electronic document (wherever located) can be treated as being located in Canada could have enormous implications for many other areas of the law if there were attempts to extend the analysis,” says Ottawa law professor Michael Geist.

Scott Shipman (right), senior counsel for eBay ‘global privacy practices,’ states »»»

As many of you know, in 2007, the Federal Court of Canada upheld the Canada Revenue Agency’s (CRA) request for certain customer information regarding Canadian PowerSellers during the years 2004 and 2005. In defense of our members’ privacy, we vigorously defended that ruling, and a series of appeals has been underway since then.

Unfortunately, on November 7, 2008, the Federal Court of Appeal ruled in favour of the CRA, and against eBay. Consequently, the court has ordered eBay to provide information on PowerSellers from 2004 and 2005.

We have sent an email to all members whose information must be released to the CRA. Please check your Messages folder in My eBay if you are unsure of whether you are affected by this ruling.

This is not the outcome that we wanted, and we strenuously object to being forced to release our members’ information. Protecting our users’ privacy is of the utmost importance.

Please note that the CRA has indicated to us that they will seek court orders for PowerSeller information for subsequent years. Given their intentions, we would like to remind sellers once again that they are responsible for ensuring that they are in compliance with all laws and regulations relating to their activities online. A change in PowerSeller status at this time will not alter our information disclosure requirements.

Says Geist  »»»

A key part of the case turns on the fact that the requested information is located on servers outside the country.  This leads the court to discuss concerns associated with Internet jurisdiction and cloud computing, with it arriving at the view that for the purposes of the Income Tax Act, the availability of electronic documents on computer servers located anywhere in the world can be treated as located in Canada.  It notes that:

“it makes no sense in my view to insist that information stored on servers outside Canada is as a matter of law located outside Canada for the purpose of section 231.6 because it has not been downloaded. Who, after all, goes to the site of servers in order to read the information stored on them?”

While this conclusion may be limited to the specific Income Tax Act provision, the concept that the mere accessibility to an electronic document (wherever located) can be treated as being located in Canada could have enormous implications for many other areas of the law if there were attempts to extend the analysis.

Stay tuned.

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Globe and Mail – Ottawa widens tax probe of eBay ‘PowerSellers’, November 14, 2008
Michael Geist - Federal Court of Appeal Upholds Ebay Power Seller Decision, November 14, 2008

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This entry was posted on Monday, November 17th, 2008 at 12:22 pm and is filed under Freedom. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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