Involved in the sharing economy? Know your tax obligations!
What is the sharing economy?
The sharing economy 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.
The five key sectors of the sharing economy are:
- accommodation sharing
- ride sharing
- music and video streaming
- online staffing
- peer/crowd funding
The Canada Revenue Agency (CRA) realizes that new kinds of economic activity such as the sharing economy are becoming a bigger part of the general economy. The CRA 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.
What are your tax obligations?
If you are an individual or a business participating in the sharing economy, you must report all the income you earn through sharing-economy activities. You must also meet your goods and services tax / harmonized sales tax (GST/HST) reporting and remittance requirements.
If you underreport or do not report your sales or income, you are participating in the underground economy and this could result in serious consequences. If you get caught evading tax, you may face fines, penalties, or even jail time, in addition to paying the taxes owing on unreported amounts.
If you have to register for and collect GST/HST on your transactions, but you do not, the CRA will charge you interest or penalties or both, depending on the circumstances.
Generally, if you are a small supplier whose supplies of GST/HST taxable property and services are $30,000 or less a year, you do not have to register for a GST/HST account. However, you can voluntarily register so you can take advantage of input tax credits to recover the GST/HST paid or payable on your purchases and operating expenses. Visit the CRA website for more information about your GST/HST obligations.
How to correct your tax affairs
To correct your tax affairs and report income that you did not report in previous years, you have several options:
- You can ask to change previous years’ income tax and benefit returns. Details are available at How to change your return. In certain circumstances, you may qualify to use the Voluntary Disclosures Program.
- Information on how to correct a GST/HST return can be found on the CRA website.
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Article source: http://www.cra-arc.gc.ca/nwsrm/txtps/2017/tfsk27-eng.html?rss