(WINDSOR, ON) – The nation’s tax collection department, known as Revenue Canada, has issued a strong warning reminding sharing-economy participants that they must pay income tax on their earnings.
The sharing-economy, says the federal government, “… is a technologically fuelled way to consume and access property and services. In this economy, communities pool, loan, and share their resources through networks of trust.”
Most common sectors include sharing accommodation and rides as well as music and video streaming, online staffing, and peer/crowd funding.
According to Revenue Canada, new kinds of economic activity, such as the sharing economy, are becoming a bigger part of the general economy. Because of this, the office is co-operating with industries, the provinces, and the territories to identify and address areas where the tax system and tax compliance might be affected.
Individuals and businesses participating in sharing activities are not exempt from paying income taxes. They must report all income earned from their sharing-economy activities. They must also collect and pay the harmonized sales tax through standard reporting and remittance.
Any person or business not reporting their sales or income are participating in what the department calls the underground economy. Such participation could result in serious consequences.
Those caught evading tax may face fines, penalties, or even jail time, in addition to paying any taxes owing on unreported amounts. Generally, small suppliers, whose supplies of GST/HST taxable property and services are $30,000 or less a year, do not have to register for a GST/HST account.
Visit the CRA website for more information about your GST/HST obligations.