What are the tax implications of reselling Taylor Swift tickets?

Selling tickets as a business in Canada

Some people “scratch” tickets—buying and selling them for a profit—as a business venture. If that’s you, the income is taxed as business income, which is fully taxed at your marginal tax rate.

If you buy and sell tickets for profit, Allison, you must report the income as a sole proprietor on your tax return using Form T2125, Statement of Business or Professional Activities. If you are an incorporated business owner in a ticketing business, you can report the company’s income on your T2 Corporation Income Tax Return.

If your sales exceed $30,000 in four consecutive calendar periods, you may be required to register for and collect Goods and Services Tax (GST) or Harmonized Sales Tax (HST). The rate will depend on what state or territory you live in, and where you buy and sell tickets. Some states also have state sales tax implications that may apply to different income limits.

Selling tickets purchased for personal use

If the concert tickets were meant for you to use, Allison, and you just decided to sell them, the tax implications are different. This will not represent a business where you bought tickets for profit. It just so happens that you probably got a decent profit considering the high demand for Taylor Swift tickets.

Items you buy primarily for your own enjoyment are considered “personal use” in the eyes of the Canada Revenue Agency (CRA). When you sell a used property, you usually sell it for less than what you originally bought it for. There may be exceptions for items such as rare coins, collectible baseball cards or a classic car. For personal property sold at a profit, including concert tickets, there are three rules that determine whether the tax applies.

According to the CRA:

1. If the property’s adjusted cost base (ACB) is less than $1,000, its ACB is considered $1,000.
2. If the proceeds of the condition (sale price) is less than $1,000, the proceeds of the condition are considered to be $1,000.
3. If both the ACB and the cash flow of the situation are $1,000 or less, you do not have a capital gain or loss.

The CRA defines the adjusted cost base as “the cost of the property and any costs of acquiring it, such as commissions and legal fees.” If the ACB and profit were both less than $1,000, you do not have to report the transaction. But many sellers of Taylor Swift tickets are likely to sell them for more than $1,000 or buy them. again sold for over $1,000. They may need to report their profits on Schedule 3 of their tax return as capital gains if their primary purpose was to buy and sell for profit or if the amount of the sale was more than $1,000.

If the personal property is part of a set, with individual pieces making up the whole, the $1,000 limit may apply to the set—for example, a series of sports cards or commemorative coins. This can also apply to a set of tickets sold together, but only if they are sold to one person. So, if you had four tickets and sold two to one buyer and two to another unrelated buyer, you might get two limits of $1,000.