Canada's Minister of National Revenue Jean-Pierre Blackburn announced on Thursday a major policy directive affecting online sellers like eBay. Blackburn declared that all online sales are subject to tax.

Blackburn said in a press statement, "Taxpayers should know that the tax laws that apply to traditional commerce apply in the same way to electronic commerce, like eBay selling.... I strongly encourage eBay sellers, and for that matter, any taxpayer who has not already done so, to correct their tax affairs as soon as possible to avoid penalties or prosecution."

The Ministry of National Revenue policy is an offshoot of the September 2007 decision by the Federal Court of Canada ordering eBay Canada to turn over to the Canada Revenue Agency details of high-volume sellers, contact information and sales records.

Blackburn encouraged voluntary correction or disclosure of information prior to an audit or other compliance action for online sellers under the agency's Voluntary Disclosures Program to avoid penalties of prosecution.

Based on the information CRA will get from eBay, Blackburn said the agency is expected to start audits by the end of summer 2009.