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TAX TIP Top 10 Tips for Your Platform Economy Tax Obligations

Friday, 19 April 2024 06:33.PM

To make it easier for you to understand your tax obligations as a platform economy participant, we made a list of the top ten tips you need to know.

Tip 1 – Know your area(s) of the platform economy

There are four areas in the platform economy

1. Sharing economy (for example, using and sharing assets like cars and spaces)
2. Gig economy (for example, short-term contracts, freelance work, or other temporary work)
3. Peer-to-peer (P2P) (for example, selling goods like clothing)
4. Social media influencers (for example, individuals with influence or significant presence on social media)

Each area of the platform economy is unique, and participants can have different tax obligations.

For example, in general, if you provide goods or services and earn more than $30,000 over four calendar quarters, then you must collect and send the related goods and services tax / harmonized sales tax (GST/HST) to the Canada Revenue Agency (CRA). However, if you earn income from ridesharing, you must collect and send the GST/HST to the CRA regardless of the amount you earn.

Tip 2 – Report your income and consider all sources

You need to report all sources of your income (if you work in more than one area of the platform economy) because your total amount may affect your tax obligations. For example, you may have different GST/HST obligations based on your total income and the areas of the platform economy that you participate in.

The good news is that reporting your total combined income actually helps you by:

• increasing your qualifying amount for a mortgage or loan
• increasing your contribution limit for a registered retirement savings plan

Tip 3 – Know what applies to you as a non-resident

Maybe you work in Canada, but you don't have significant resident ties in Canada. If this is the case, you are subject to Canadian income tax on most Canadian-sourced income paid or credited to you during the year unless all or part of that income is exempt under a tax treaty. So, the information contained in this tax tip may apply to you too!

Tip 4 – Keep records at regular intervals and explore your platform's available documents

While you must keep books and records yourself, become familiar with the documents that platforms may have available to you. Make sure to also download your documents, like total earnings and tax summaries, at regular intervals in case you can no longer access the platforms you use.

There are several ways that you can benefit from properly keeping records.

Here's what to keep:

• Date of transaction
• Location of sale
• Amount charged
• GST/HST charged
• Business number used
• Platform used for sale

Tip 5 – Determine if you're self-employed or not

Feeling like a boss? You just might be! As a platform economy participant, you may be considered to be self-employed and carrying on a business. This is important because your employment status will impact your tax obligations.

To identify if you're self-employed, you can consider a list of factors from the Employee or Self-employed web page or request a ruling to determine your status.

For a more in-depth understanding of what it means to be self-employed, explore the Learn about your taxes online learning tool. It offers a Working for yourself module that covers everything from registering your business to how to report your income.

Tip 6 – Claim your eligible business expenses

As a platform economy participant, you may be considered to be self-employed and able to claim eligible business expenses.

If you weren't motivated to keep books and records before, hopefully you are now! This is one of the ways you can benefit from properly keeping records.

Examples of business expenses in the platform economy include:

• Advertisement
• Costs of using a platform to sell products
• Software licenses and subscriptions

Tip 7 – Register for the GST/HST and collect it yourself if needed

Generally, once you level-up and earn more than $30,000 over four calendar quarters, you must register for the GST/HST. Remember, this threshold doesn't apply to rideshare drivers who must register right away!

Notes:

• You'll need to prepare some information when you register for your account (for example your effective date or registration, GST/HST fiscal year, annual revenue, personal and business information).
• If the platforms you use don't collect GST/HST for taxable sales like subscriptions, you can account for it yourself by adding it to your invoices.
• If you don't collect GST/HST, you will still owe the CRA the GST/HST on your taxable supplies if you make $30,000 over four calendar quarters.

Tip 8 – Visit the CRA's Taxes and the platform economy web page

You can visit the CRA's Taxes and the platform economy web page for technical and up to date information on you tax obligations as a platform economy participant.

Tip 9 – Get help from the CRA for your taxes

The CRA offers lots of resources and help for you or your small business(es).

For example, the liaison officer service provides tax help for small businesses where you can meet one-on-one with an officer to go over common reporting errors and to receive other personalized support.

Tip 10 – Correct your tax affairs voluntarily

If you have omitted some of your platform economy income and need to resubmit your correct affairs, you can submit a case to the Voluntary Disclosures Program to reduce or avoid penalties and interest.

SOURCE: Canada Revenue Agency

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