As a resident of Canada and a Canadian taxpayer, you are required to report all the income you earned.
For most taxpayers, it’s pretty easy to report their income since most people do get tax slips like T4s from their employer, or T4A from pensions, and tax slips from the banks and credit unions: T5s for interest, T3s for investment income, and T4RIF for income from Registered Retirement Income Funds, etc.
But there are many different sources of income that you may not get a tax slip for, but you are still required to report the income.
Online Platforms
Most self-employed taxpayers know how to claim their income, but there are newer sources of income that you may not think of as reportable income.
Whether the earnings you make from online platforms is your main source of income, or a small part of it, you are considered to be a platform economy participant. When it’s time to file your taxes, you must report all sources of your income, including gifts or merchandise earned through these online platforms.
In the platform economy, there are four areas in which you can earn income from online platforms:
- Sharing economy (for example, using and sharing assets like cars and spaces; think Uber and Airbnb)
- Gig economy (for example, short-term contracts, freelance work, or other temporary work; think of being paid for work but no T4 is issued)
- Peer-to-peer (P2P) (for example, selling goods like clothing)
- Social media influencers (for example, individuals with influence or significant presence on social media)
Do you work in any of these areas? If so, this information is for you.
What is a social media influencer?
Social media influencers use social media platforms, such as YouTube, Instagram, Twitch, Facebook, Twitter, or a blog to make posts and build up followers of their content. Influencers who generate monetary and non-monetary income through social media may be carrying on business activities and earning business income.
Did you receive subscriptions and perks like merchandise and trips or other income?
If you earned income by posting pictures, videos and more on your social media channels that involves product placement or product promotion, you may be undertaking a business activity. You can earn income from your social media activities in many ways, both monetary and non-monetary (barter transactions), including, but not limited to:
- subscriptions to your channel(s)
- advertising (clickbait and brand advertisements)
- sponsorships
- calls to action
- merchandise sales or commission on sales
- tips
- perks such as products, clothes, trips or other gifts
- referral codes
Income tax implications
If you are carrying on a business through your social media channels, you must report the income (both monetary and non-monetary) that you earn through these activities on your income tax return. When reporting non-monetary income, you must use the fair market value of the item received. The Canada Revenue Agency, CRA, will generally consider your social media activities to be business activities where there is an element of profit to your activities.
Business expenses
If the income you earn from social media activities is considered business income, you may be able to deduct eligible business expenses to reduce your tax owing. To be deductible, expenses must relate directly to your business activities as social media influencers. Your expenses must be reasonable, not personal in nature and you should be able to substantiate them. To learn what qualifies as an eligible business expense, search CRA Business Expenses. In addition, the amount you can deduct in a year for an expense depends if it is considered a current year expense or capital expense. For more information, search CRA Current or Capital Expenses.
Platforms sharing info with CRA
For 2024, CRA requires all online platforms to share information with them. So CRA will already know how much revenue you have received, so be prepared to report it and then also claim all eligible expenses on your 2024 taxes.
If you provide activities through a digital platform and are considered a reportable seller, your information will be collected by your reportable platform operator(s) and be reported to the CRA.
What information is shared with CRA?
- Name of seller (first and last name of an individual)
- Seller’s primary address
- Each jurisdiction in which the seller is resident for tax purposes
- Date of birth
- Business registration number, if issued or required to be collected by the jurisdiction of residence of the seller
- Any financial account identifiers (for example, bank account numbers) for the seller that are available to the platform operator.
- Activity information
- Total consideration paid or credited to the seller in the reporting period in respect of relevant activities (broken down by calendar quarter) and the number of such relevant activities
- Any fees, commissions or taxes withheld or charged by the platform operator (broken down by calendar quarter)
- Where the seller rented real or immovable property: the address of each property listing; if available, the land registration number; where available, the number of days each property listing was rented during the reporting period and the type of each property listing
- Your platform operator(s) will provide you with a copy of the annual information that is collected and reported about you under the rules by January 31 of each year.
Regardless of how you earn your income, you are required to report all of it on your personal income tax return each year. By everyone reporting correctly it makes it right for all of us to pay our fair share of taxes each year.
Anni Markmann is a Personal Income Tax Professional and Certified Financial
Planner; living, working, and volunteering in our community. Contact Ste
Anne Tax Service at 204.422.6631 or 36 Dawson Road in Ste Anne (near Co-op) or info@sataxes.ca