The Tax Blog for Smart Canadians

Tips and tricks for Canadian tax filers at every stage of life from UFile's tax expert Gerry Vittoratos



Bloggers and influencers

by UFile Team Équipe ImpôtExpert | Mar 19, 2019   Comments:

UFile blog - Influencers

So, you’ve jumped into the world of social media and have found a way to make money doing it. Whether it’s through the creation of a blog or a podcast, or by being an influencer on social media sites like Facebook, YouTube and Instagram, the income earned from these sources is taxable on your tax return. But how should you report this income? Read on.

Am I a business?

Yes, the income you receive as a blogger or influencer is considered business income by the Canada Revenue Agency (CRA). Since you don’t receive a weekly or bi-weekly paycheck from an employer, and no one sets a schedule for you (nice!) or gives you orders (even better!) you are a business. Even though your sources of income differ from those of a traditional business, what you earn is still gross business income. Tax-wise, this gives you two advantages:

  • You don’t have to pay any tax on this income until April 30th of the following year when you file your tax return.
  • You can deduct expenses from your gross business income to lower your tax bill.

If I get free products instead of payments, do I have to report these as income?

Yes. If you are given a product to promote in your blog or through your social media activities, the value of the gift is considered a payment for services rendered, and as such, it has to be added to your gross business income.

What can I deduct?

Considering that this type of business is usually home-based, you can deduct expenses for the business use of a workspace in your home. The key word here is “workspace.” You are allowed to deduct expenses incurred for your home, but only for the portion that serves as your workspace. This means that you must prorate your expenses based on the area that the workspace represents vis-à-vis the total area of your home (workspace divided by total space of home). In addition, your workspace must be used primarily to earn your business income. 

The types of home-based expenses you can deduct include part of maintenance costs such as heating, home insurance, electricity, and cleaning materials. You can also deduct part of your property taxes, mortgage interest, and depreciation, or rent if you rent your home.

Expenses such as your cell phone data and home internet charges must also be prorated per the formula mentioned above.

If you’re using your car for business purposes, you can deduct expenses such as maintenance, repairs, fuel, depreciation, leasing fees, insurance, licence and registration. However, you must prorate these expenses based on the business use of your car. For example, if 30% of the mileage you put on your car for the year is related to your business, you can deduct 30% of these expenses off your gross business income.

Won’t my tax bill be high when I file my tax return?

It’s certainly possible. Unlike employees who prepay their income tax for the year through payroll tax, self-employed individuals only pay tax on their business income when they file their tax return. If this is your case, when your business really takes off, the government will likely set you up with an instalment schedule to prepay your taxes in quarterly payments. This way, you won’t get the shock of a lifetime when you file your tax return.

 

Would you like to learn more about the fiscal aspect of earning income from social media activities? Connect with us on Facebook and Twitter for news and updates on the 2018 tax return and UFile online tax software. Visit Tax & U to get accurate answers to all your questions about your 2018 tax return.

Leave a comment