Canadian tax for content creators can be complex. As a creator, unless you incorporate your business, you are generally considered self-employed when it comes to your Canadian taxes. This article is aimed at assisting self-employed content creators better understand Canadian taxes.
What tax return do I file?
For self-employed individuals, you complete your T1 Personal Income Tax and Benefit Return as every other Canadian taxpayer. The way you report your self-employment income and expenses is on Form T2125 Statement of Business or Professional Activities. On that form you break down your income and various expenses for the Canada Revenue Agency (“CRA”) and are taxed on your net income, that is your revenue less your expenses.
It’s important to fill out your return accurately, as any inaccuracies can raise red flags for CRA and result in inquiries or audits. You need to add up your earnings and expenses for the year and categorize them properly, it’s not appropriate to use estimates or round numbers. If you need assistance with your tax filings, it’s best to reach out to a trusted tax professional to have them prepare your tax filings.
What revenue do I need to report on my tax return?
All taxpayers must report all revenue that they earn in a year on their tax return. For content creators, revenue can look different from other businesses as it is often from different sources. For example, content creators may earn revenue from advertisements for other businesses, brand deals, collaborations with other creators, the sale of pictures and videos, subscriptions to private pages, and more.
Even money noted as “donations” or “tips” is considered revenue when it comes to your taxes, and must be reported on your tax return. Furthermore, say a subscriber provides you with a gift, such as a new digital camera, the value of that gift must also be reported as revenue on your tax return.
What expenses can I claim on my tax return?
Broadly speaking, you can claim any expense on your personal tax return as long as it relates to your business, is not personal in nature, was paid or payable in the year, and is not capital in nature. Let’s break that down in terms of expenses for content creators. Say you produced content on your private subscription based website and it involved a unique outfit. You could expense that outfit on your taxes, provided that it isn’t suitable for being used in your personal life, you actually paid for the outfit, it relates to content that you created for your business, and it is not going to last for multiple years.
Content creators also pay for items such as digital cameras, lighting equipment, computers, and computer software. While you can claim these on your personal tax return, they may be capital in nature and need to be claimed over a number of years rather than all in one year. When it comes to taxes as a content creator, if you are unsure of what you can claim as an expense, it makes sense to reach out to a trusted professional to get advice on your unique situation.
When do I need to pay and file my tax return?
You may have heard that you can file your tax return by June 15 and be considered to have filed your tax return on time, as a self-employed individual. This is correct when it comes to filing, however the balance of your taxes owing are due April 30 even though your return does not need to be filed until June 15. This difference in dates can cause issues and can cost you money if you don’t pay the balance owing of your taxes by the due date. There are also penalties for filing your return late.
Do I need to keep records to support my tax filings as a content creator?
All Canadian taxpayers are required to keep records to support their tax filings, whether they are self-employed, an employee, retired, or even deceased. In general, you must keep adequate books and records to support your tax filings for at least 6 years from the last year to which the records relate.
That is a fancy way of saying you need to keep your records for at least 7 years. Whether it you have a statement of income from an online content creation platform, or you have a receipt for a costume you used to produce content, you need to keep all these documents for at least 7 years.
Does it matter what type of content I create as a content creator?
It does not matter what type of content you create as a content creator when it comes to your taxes. Whether you are preparing your taxes yourself, or with the help of a professional, your tax return needs to be prepared accurately and on time. The type of content you create may be relevant to explain certain expenses when it comes to your tax return, but your accountant largely does not need to know what content you are creating.
If you provide them with a receipt for $500 of strawberries and chocolate syrup, they may ask if the receipt relates to creating content – a simple yes or no will suffice. Your accountant does not need to, and should not ask, to see your content.
When does it make sense to get expert help?
Getting help with your taxes as a content creator can make sense at any level of revenue or income. Even if you are earning a relatively modest amount as a content creator, the complex nature of our tax system means that getting help with your taxes is the right thing to do. Your focus should be on creating content and growing your business, not trying to learn the ins-and-outs of personal taxes. Hiring a professional accountant can assist you with meeting your tax obligations each year, regardless of how big of a content creator you are.
We specialize in assisting content creators with their taxes, and encourage you to reach out to us for a complementary consultation to see if working with us is right for you.