Several influencers have been hit by taxes for failing to declare certain benefits, trips and stays received as gifts. Here you can find out what you need to know about reportable income and deductions as a self-employed person.
From a tax point of view, the status of self-employed or self-employed is very different from that of employees. While the latter have deductions at source on their salary to pay the various contributions and income taxes, the self-employed have to deduct these amounts themselves.
This year, self-employed people have until June 15 to file their income tax returns, but be careful, as amounts owed to the tax office must be paid by April 30 at the latest to avoid penalties.
Gifts are important too
A self-employed person does not receive a salary and does not receive a T4 from their employer like a classic employee. On the other hand, his clients send him T4As with the amounts they paid him in return for his services.
Josée Cabral, top tax specialist at H&R Block, says there are other incomes to consider beyond these amounts. “Gifts received must also be declared. For example, if an influencer is promoting a telecom company in their posts and they were given a free phone, they need to report it,” she says.
To do this, he must state the market value of the product in question and include it in his business income. The same applies to travel, hotel accommodation and other goods and services that it receives in return for its services.
Lots of deductions
However, a self-employed person has the option of deducting certain expenses provided that they have been used to generate income.
They are many. These include advertising expenses, meal and entertainment expenses, travel and parking expenses, office expenses, stationery and office supplies, interest and bank charges on work accounts, internet, telephone, costs for seminars, conferences and training, honoraria (legal and accounting), union or professional code dues , travel expenses for professional purposes etc.
Don’t forget the sums related to the use of the vehicle for work (petrol, insurance, maintenance and repairs, registration, driver’s license, etc.), which will be deducted in proportion to the kilometers traveled for work.
“In addition, all the costs incurred for using a home office such as heating, electricity, insurance, maintenance and repairs are incurred. For renters, we also add up rent, and for owners, interest on the mortgage loan, property taxes, and condominium fees, if applicable,” lists Josée Cabral.
Again, the area used for the work must be evaluated in relation to the total area of the dwelling. For example, an office occupying one room in a 4 1⁄2 represents 25% and this percentage is used to calculate deductions.
“People who become influencers have no experience. They spend all of their income and are surprised at what the tax demands of them afterwards. They come to us with their T4As but have not kept receipts for their prints. You need to be well informed and have money set aside for the amounts you have to pay to the tax authorities,” Ms Cabral warns.
Advice
- Keep all your bills and proof of payment. Ideally, we photograph or digitize them and put everything in one file on our computer.
- Keep your documents for at least six years as the government may ask for them during an audit.
- As a self-employed person, it is advisable to have a professional bank account that is different from your private account.
- Above $30,000 in income, you must register for the GST-QST file, charge these taxes to your customers, then declare and remit them to the government.
- For more information on eligible expenses as deductions, visit this Canada Revenue Agency page.
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