The way Canadians are working is rapidly changing. The so-called Gig Economy has exploded in recent years, fuelled by the increasing popularity of online platforms like Uber, DoorDash and others. In fact, Statistics Canada estimates that approximately one out of every ten of us is now participating in the Gig Economy.
This rapidly growing category of work is based on temporary and freelance roles, or short-term contracts. Approximately half of those involved in the Gig Economy work to supplement an existing source of income. For the other half, it’s their sole source of income.
Whatever your involvement is in the Gig Economy there are tax considerations to be aware of. The Canada Revenue Agency typically considers those carrying out this kind of work as self-employed instead of an employee for tax purposes.
In this article, we’ll explain the tax obligations for those engaging in Gig Economy work.
Income Tax Obligations
If you’re a resident of Canada, you must report your income from all sources on your income tax return. Your work may be carried out anywhere, for companies based around the world, but it must all be reported. You could be eligible for a tax credit if you paid foreign income tax.
Gig workers who are not residents of Canada but work for Canadian companies are subject to Canadian income tax on most Canadian-sourced income paid or credited to them during the year. The only exception is if all (or part of) that income is exempt under a tax treaty. More information for non-residents is available at non-residents and income tax.
Eligible Business Expenses
Many Gig Economy workers are eligible to claim business expenses relating to the income they earned in their roles. Make sure to keep proper records and receipts for the costs you incur in your day-to-day role. These records should include:
- A list of all earnings from gig work
- Details about when, how and where you did the work
- Details of the business expenses incurred doing the work, supported by invoices, receipts, or vouchers
Check out a guide we recently wrote on the common CRA-approved tax deductions in Canada.
GST/HST and the Gig Economy
If you work in the Gig Economy and earn more than $30,000 a year from your work, you have to register for, collect and pay to the Canada Revenue Agency the goods and services tax / harmonized sales tax (GST/HST) on all taxable sales. Visit the Government of Canada website to learn whether you need to register for a GST/HST account.
Learn More
To learn more about the tax side of the Gig Economy, the Government of Canada has created a handy guide with further information. You can also visit Small Business BC’s Tax Season Hub, where we’ve gathered a range of articles on popular small business tax topics.
Small Business BC is Here to Help
SBBC is a non-profit resource centre for BC-based small businesses. Whatever your idea of success is, we’re here to provide holistic support and resources at every step of the journey. Check out our range of business webinars, on-demand E-Learning Education, our Talk to an Expert Advisories, or browse our business articles.
