Hobbies and side hustles

About hobbies and side hustles

You may think it is just a hobby, but CRA may disagree. CRA wants its fair share if you earn money through a little side hustle, business activity, or another extra gig. The agency believes many tax dollars in the past may have gone uncollected about hobbies and side hustles, and they aren’t happy about it.

How and where you make money is shifting, and CRA has been paying close attention to what is referred to as “platform economies.”

A platform economy 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.
Let’s break down the platform economies.

The Gig Economy

This one isn’t new, and many will tell you that the gig economy can make ends meet.
You provide service on a short-term basis, pick up a contract for a period of time, or go the freelance route. Companies hire independent contractors or freelancers in a gig economy, often through online platforms or apps. These workers are typically considered to be self-employed instead of employees. The money from the gig economy 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.
Talking about hobbies and side hustles, if you use 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.
Before you panic, CRA isn’t likely interested in last year’s Lululemon pants you decided to resell for a fraction of the cost. However, they are likely interested if you are 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 CRA. It doesn’t 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 aren’t 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 isn’t all bad news. You have to report all of the income generated, but you will also deduct all the expenses incurred to generate the income. So your crafting hobby is likely fine if it costs you more to make something than what you can sell it for.

About hobbies and side hustles, if you are 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.

​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.

Source: CTVNews.ca


Events & Sponsorship

Toronto Entrepreneurs Conference @ Mississauga

May 08, 2019 Our B.E.S.T. (Business Entrepreneurs Services Team) Group has participated in this event for first time. Toronto Entrepreneurs Conference and Trade Show is the largest Entrepreneurs event in Canada. The event which targets business owners, partners or...

Hispanic Fiesta 2018

September 04, 2018 RGB Accounting will participate in this event for a second year in a row. Hispanic Fiesta will be held at Mel Lastman Square in Toronto during the Labour Day Weekend, August 31st, Sept. 1, 2, & 3, 2018. Hispanic Fiesta is a four-day celebration...

Secure Your Future Seminar 2018

June 20, 2018 This event gathered business owners running a small or medium-sized business, self-employed and incorporated businesses willing to learn tax saving strategies to help them utilize their company assets to secure their retirement. We are proud of having...

2nd Latino Business Expo Show

May 19, 2018 The 2nd Latino Business Expo Show held on May 19th at Daniels Spectrum gathered a wide range of entrepreneurs and business owners avid to learn how to take their businesses to the next level. RGB Accounting participated as vendor and speaker at this...

Hispanic Fiesta 2017

September 04, 2017 Hispanic Fiesta, a celebration of Spanish and Latin-American: Arts, Food, Music and Entertainment, is a four-day celebration filled with the splendid sounds, tempting treats and colorful culture featuring 300 local, national and International...

Articles & Publications

Have Unfiled Tax Returns For Years?

Do You Have Unfiled Tax Returns For Years? As for the record, the CRA wants you to file and pay your taxes on time every year. When you cannot do so, you may put yourself at risk of high penalty amounts and collection tasks like bank levies or wage garnishments. We at...

Old Age Security One-Time Payment Only

Old Age Security One-Time Payment Only. You will receive the one-time payment for older seniors if you were: born on or before June 30, 1947, and eligible for the Old Age Security pension in June 2021 If you have applied for the Old Age Security pension but have not...

CRA Notice of Objection

​CRA Notice of Objection (NOO) Once you file your taxes, you receive a Notice of Assessment and later a Notice of Reassessment.  You have two options:  Pay the taxes owing  File a CRA Notice of Objection (NOO). The CRA is not always right; when you disagree, you can...

All You Need to Know About Trust Funds in Canada

All You Need to Know About Trust Funds in Canada A trust is a vehicle for holding and passing on the family property. As such, it typically serves at least one of two purposes: It can reduce a family's taxes by shifting income to members in lower tax brackets, and it...

Non-Resident Canadian Tax Clearance Certificates

People who are not Canadian Residents for Tax Purposes may be subject to a withholding tax when they sell Canadian property. All non-resident Canadian for tax purposes may be subject to this withholding tax if they sell real estate in Canada. This holds if they own...

Share This