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You may think it is just a hobby, but CRA may disagree.
If you are earning money through a little side hustle, business activity or other extra gig, CRA wants its fair share. The agency believes a lot of tax dollars in the past may have gone uncollected, and they arent happy about it.
How and where you make money is shifting, and CRA has been paying close attention to what are referred to as platform economies.
A platform economy is simply a platform that brings buyers and sellers together through the internet or mobile apps. These sources are gaining traction and popularity, and could be significant contributors to household income that has gone unreported.
Lets break down the platform economies.
THE GIG ECONOMY
This one isnt new, and many will tell you that in order to make ends meet, the gig economy is where it is at.
You provide service on a short-term basis, pick up a contract for a period of time, or go the freelance route. In a gig economy, companies tend to hire independent contractors or freelancers, often through online platforms or apps. These workers are typically considered to be self-employed instead of employees. The money they make is considered to be income.
It is important to note that the gig economy is very different than the sharing economy, which is also under the spotlight of CRA.
THE SHARING ECONOMY
This is where money is earned from unused assets such as a room in a home or cottage, or a vehicle.
Think ridesharing, bike rentals, boats, machinery or equipment.
If you are using your personal assets to generate additional income by sharing them, CRA wants to know about it.
THE PEER-TO-PEER ECONOMY
People will sell their goods or services from one person directly to another person.
The second-hand economy is booming: think Posh Mark, Kijiji, eBay or Etsy to name a few.
Now before you panic, CRA isnt likely interested in last years Lululemon pants you decided to resell for a fraction of the cost.
However, they are likely interested if you are someone who is a buyer snapping up deals and reselling for a profit.
SOCIAL MEDIA INFLUENCERS
We all know someone making money off a social media platform through product placement, endorsement or promotion. They become a brand ambassador and motivate others to buy a product or service.
This too could be very lucrative via advertising revenue, and is also very visible to to CRA.
It doesnt take a lot of investigation to go online to determine who is doing what.
If you are getting paid, CRA wants to know about it too. The audit will happen.
THE BALL IS IN YOUR COURT
As the landscape has shifted, so too have the means to identify those who arent reporting income.
CRA will go to great lengths to check out people on social media and try to connect the dots.
In other words, an endorsement for a big brand but little income reported warrants suspicion of tax evasion and an audit. Or if you rent a room via Airbnb, it will show up, as CRA has proven its effectiveness at gaining access to anyone registered with any online platform.
Now it isnt all bad news. Yes, you have to report all of the income generated, but you will also be able to deduct all the expenses incurred to generate the income. So your crafting hobby is likely fine, if it costs you more it to make something then what you can sell if for.
If you are at all uncertain and fear you may have crossed the line, reach out to CRA. Consider doing so via the Voluntary Disclosures Program. Voluntary only applies if you are unaware of CRA taking any compliance action against you. Be sure to include all the relevant information and income generated, and the potential estimate of tax owing.
8203;You know if you have been generating unreported income, so the ball is in your court. You might want to consider calling CRA before they come calling for you.
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TOM PETTY
LIFE IS A HIGHWAY
02:43 PM |
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NICKELBACK
HORIZON
02:40 PM |
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POP EVIL
RAISE YOUR FLAG
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MAYDAY PARADE
SIDEWAYS
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DESTROPHY
DEAD ENERGY
02:30 PM |
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STONE SOUR
GIMME SHELTER
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BLAME ME
FIRE FUEL AND SCARS
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THREE DAYS GRACE
NEUROTIC
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UNLEASH THE ARCHERS
HEARTLESS WORLD
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3 DOORS DOWN
ONE LIGHT
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