The good news is that Canada’s tax system isn’t that complicated, and the CRA website has resources that are designed for freelancers. That said, there’s a lot to take in, so this post will go over some of the basics to help you with any fears or concerns that you may have.

Should I be filing taxes as a freelancer?

As a freelancer, you are obligated to report any income earned from your side hustle to the CRA. Regardless of the amount, even if it’s just a few hundred dollars, reporting is essential. If you don’t file your taxes, it’s tax evasion. In addition, by filing your taxes, you may become eligible for certain grants and government incentives.

To be clear, even if you have a full-time job, you still need to file your taxes for any income you’ve made on the side. Some people think you must register your business first, but that’s irrelevant as any money made is taxable.

If you invoice under your name, you are not legally obligated to register your business. However, if you prefer to invoice under a business name, you are required to register your business name in your province.

Tax Deadlines for Freelancers

Generally, the tax deadlines are as follows each year:

• March 1: RRSP contributions deadline
• May 1: Tax filing deadline for most individuals
• May 1: Deadline for any tax balance owing
• June 15: Tax deadline for self-employed tax returns

If any of those dates fall on a weekend, then the deadline is moved to the following Monday. Also, on leap years, the RRSP deadline gets moved back to February 29.

Knowing these deadlines is essential since if you miss any of them, you may be charged fees and interest. Even if you don’t have the money to pay any taxes owed, you should file your taxes on time to avoid any fees.

GST/HST Registration

Freelance taxes remain relatively simple when your income is less than $30,000 since you’re still considered a small supplier. However, you must register for a GST/HST number as soon as you pass that threshold. The CRA isn’t keeping tabs on you. It’s totally on you to keep track of your income and register when necessary. You also don’t need to wait until you make $30,000 in side income. You can register whenever you want, but once you register, you must collect taxes.

To be clear, the $30,000 threshold only applies to freelance income. It doesn’t matter if you’re making more than that from your regular job, you only need to get an GST/HST number if you make $30,000+ in freelance income.

When you’re ready to file your GST/HST, you can choose the quick method when it comes to reporting the taxes you’ve collected. This method mainly benefits service-based freelancers since it’ll simplify things when you do your taxes. Regular small businesses may want to stick to the traditional methods to maximize their credits.

Also, note that if you owe more than $3,000 in taxes in a year, the CRA will require you to start paying your taxes on a quarterly basis. Here’s a detailed guide I wrote on how to get an HST number in Canada.

Canadians with clients outside of Canada

According to the CRA, companies based outside of Canada are zero-rated, so you don’t need to charge them taxes. However, any income you earn from those clients must still be reported.

Since GST/HST registration applies to your income, you must still register for a tax number once you reach $30,000 in income, even if all of your clients are outside of Canada.

When you file your taxes, there will be a section asking how much of your income came from outside of Canada. You should report that separately from your Canadian-based income. The CRA likely won’t ask why you haven’t collected must GST/HST as they’ll be able to see that you had income coming from outside of Canada.

How much tax to set aside

Unlike full-time employees, freelancers are responsible for paying their own taxes. As a general rule, you should always set aside 25% of your income for taxes. However, you must set aside more if you’re in a higher tax bracket. Check your provincial tax brackets, so you have a rough idea of how much you’ll end up owing.

In addition, freelancers need to pay both employer and employee contributions to the Canadian Pension Plan (CPP), so that’s another expense or tax you need to factor in.

Anyone who collects GST/HST will eventually need to pay that back. The good news is that any GST/HST you’ve paid to your expenses will offset what you owe. In other words, you should have detailed records of your business expenses.

Eligible expenses for freelancers

The CRA website has a full list of expenses you can claim, but generally speaking, you can deduct any reasonable expenses related to the cost of your business. For casual freelancers, the following are things you’ll want to claim as expenses.

• Advertising
• Cellphone and internet bill
• Meals and entertainment
• Office supplies
• Travel
• Insurance
• Rent

Keep in mind that only the business-related portion of these expenses can be claimed. For example, if your home internet usage is 20% for freelance work and 80% for personal, you can only deduct 20% of your bills.

How you keep track of these expenses is entirely up to you. For the longest time, I tracked everything manually in Excel, but that’s because I happen to like spreadsheets. One digital option available is QuickBooks Self-Employed.

If these deductions are making your head spin, don’t worry. TurboTax solutions for Self-Employed walks you through the tax filing process while prompting you with self-employment questions. This ensures you get every business deduction you’re entitled to, which in turn means more money in your pocket. Here are some ways you can save money on your taxes.

Using a business credit card

A common question freelancers and small business owners ask me is whether they should get a business credit card. It’s a personal preference, but it also depends on your situation.

If you’re a freelancer making limited income and having few expenses, you can use a personal credit card. You’ll just need to manually separate your personal expenses from your business ones when doing your taxes. Hopefully, you have one of the best travel credit cards in Canada or one of the best cash back credit cards so you can rack up those points.

For those who have frequent business expenses or just want things completely separate from their personal lives, a business credit card can make a lot of sense. Business cards typically give you a higher credit limit and a longer interest-free period. You also get detailed reports on your spending, which will be helpful when you do your taxes.

Best business credit cards in Canada

I have a detailed list of the best business credit cards in Canada, but here are a few to help you get started.

• Best welcome bonus: American Express Business Gold Card
• Best for travel rewards: American Express Business Platinum Card
• Best for no foreign transaction fees: Scotiabank Passport Visa Infinite Business Card

How to file your taxes as a Canadian freelancer

When you’re ready to file your taxes, you’ll fill out the T2125 form. This form is a statement of your business activities, covering your income and expenses. Even though you can still file your taxes by hand, most people tend to use other methods.

Using tax software

Freelance taxes for Canadians is easy if you’re using tax software. Which software you use is up to you, but I’ve been using TurboTax for a few years now since I like their suite of products, which includes:

• TurboTax Assist & Review Self-Employed
• TurboTax Full Service Self-Employed
• TurboTax Live Full Service

TurboTax is the only Canadian tax preparation software designed specifically for self-employed individuals. With TurboTax Assist & Review Self-Employed, you file your taxes online, but you have access to an expert who knows all about self-employment issues. What I mean is you can ask one of TurboTax’s experts questions while you’re filing your taxes. They’ll even review your taxes for you before you hit submit.

If you’re still intimidated by filing your personal tax return, use TurboTax Full Service Self-Employed. You can have an expert file your taxes for you. This is all done virtually, so there’s no need to leave your home.

Hiring an accountant

Hiring an account is a great idea if you’re uncomfortable doing things on your own or you haven’t filed your taxes in years. Even though accountants will cost you more than tax software, think of them as an expert that you have access to in case you have any questions. If you do plan on going the accountant route, be sure to look for one before tax season begins as they’re more likely to accept new cleints.

Final thoughts

This post is meant to be a taxes for freelancers quick guide. Handling your freelance taxes can become complicated pretty quickly which is why I recommend hiring a professional to help you with them. A good accountant won’t cost you that much and there’s a pretty good chance that the money they save you on taxes, will cover the fee you’re charged. 

Most freelancers don’t get a tax refund, but that’s arguably a good thing since you haven’t loaned the government money for free. It doesn’t matter if you’re a content creator on OnlyFans, or you’re an Uber driver, doing your taxes is a must.

Frequently Asked Questions

What can freelancers in Canada deduct from their income?

As a freelancer in Canada, you can deduct various expenses related to your work, such as:

• Office supplies and equipment
• Business-related phone and internet expenses
• Advertising and marketing costs
• Travel expenses for work purposes
• Professional development and educational expenses

How do Canadian freelancers determine their tax liabilities?

To determine your tax liabilities as a Canadian freelancer, you must:

1. Calculate your total income from freelancing and any other sources.
2. Subtract any applicable deductions.

Remember to account for any necessary GST/HST and CPP payments. You can also use an online income tax estimator.

What should freelancers with another job in Canada be aware of tax-wise?

If you have a side hustle in addition to your regular job, you should be aware that:

• Your combined income from all sources will determine your tax bracket.
• You may need to set aside a higher percentage of your freelance income for taxes.
• You can claim any expenses related to your business to lower your tax burden.
• RRSP contributions will also help lower your tax obligations.

Is it necessary for Canadian freelancers to register their businesses?

Freelancers in Canada are not required to register their business unless their annual revenue exceeds $30,000, in which case they must register for a GST/HST account.

What differentiates freelancing and self-employment for tax purposes in Canada?

In Canada, freelancers are considered self-employed for tax purposes. The terms are often used interchangeably.

What is Paysimply.ca?

Paysimply.ca is an online service that takes credit card payments – for a fee – and converts them into electronic bank transfers that the suppliers accept. This allows you to pay bills that typically only accept payments directly from your bank account. Some of the most common recipients that allow bank transfers but not credit cards include the Canada Revenue Agency, most cities, and many utility companies.

Some of these bills can be pretty high, which is why some people prefer to pay with credit. That’s because they can earn points, which may be more valuable than any fees paid.

How to Pay Taxes and Bills With a Credit Card

Paying your taxes and utility bills is easy. You just need to follow these steps:

• 1. Head to paysimply.ca and search for the supplier you need to pay. For example, “City of Toronto”

• 2. Click on the relevant search result

• 3. Enter the details, including your name, account number, and the amount to be paid.

• 4. Choose the method of payment

• 5. Enter your payment details and confirm the payment

You will then receive an email with the transaction confirmation and the payment will be made using the details you provided.

How Much Does Paysimply.ca Cost?

Playsimply.ca charges 2.5% for all credit card transactions. For example, if you were charging $5,000, a fee of $125.

They accept Visa, MasterCard and American Express cards, but each issuer’s fee is the same.

Is Paysimply.ca Worth it?

Since you can pay your taxes and bills without any additional fees via your bank account, most people wouldn’t even consider Paysimply. However, using Paysimply can make a lot of sense in the right situation.

Meeting a Credit Card Minimum Spend Requirement

Paying taxes or bills with a credit card lets you quickly reach the minimum spending requirement on new credit cards. This is relevant because some of the best credit cards in Canada have significant minimum spending requirements to trigger welcome bonuses.

For example, the American Express Platinum Card is one of the best travel cards in Canada, and it typically has a welcome bonus of 70,000 – 120,000 points. The problem is the minimum spend requirement to get the welcome offer is typically $7,500 – $10,000 in the first three months of card membership. Having the option to pay taxes and bills might help reach that $10,000 spending requirement.

The Value You Get is Higher Than The Cost

If you know the points gained from paying a bill outweigh the 2.5% fee, then you should consider Paysimply. For example, some loyalty programs will run promotions where you can earn bonus points or status when reaching a minimum spend requirement during a set period. This is very similar to getting a welcome bonus, but instead, you’re getting a different type of reward.

You Need to Manage Cash flow

Tax and bill payments typically have penalties if you miss the payment deadlines. This can be problematic for anyone who doesn’t immediately have the cash available to pay. Since Paysimply allows you to pay with credit, this gives you at least 21 interest free days before you need to pay your bill. This is a reasonable solution for someone who doesn’t have the money now but expects to have the funds shortly.

While the 2.5% fee may seem high, if you have a cash back credit card, you could potentially be earning 2% back. That means your net fee would only be 0.5%. Of course, using a credit card to manage cash flow is only worth it if you pay your entire statement on time. Otherwise, you’ll have to pay the hefty interest rates credit card charges.   

Do I need to create an account with paysimply.ca?

You don’t need to create an account to pay a bill with paysimply.ca. There’s not even an option to create an account with them, so that means you have one less login and password to remember. It also means that you must start from scratch each time you want to pay since you can’t store your credit card information. On a positive note, since your information is never stored, there’s no risk to It being compromised.

Another downside is that you can’t search for your payment history, so keep your confirmation emails and detailed records.

Final thoughts

My Paysimply review is positive. While I wouldn’t pay my taxes and bills regularly with the site due to the 2.5% processing fee, it’s an excellent option for anyone looking to meet the minimum spending requirement on their credit cards. Welcome offers can sometimes be worth more than $500, so you’d still come out ahead even when factoring in the fee. If your property taxes are a few thousand dollars each year, then it’s a great reason to sign up for one of the best travel credit cards before you make your payment to take advantage of any welcome bonus available.

Know your tax deadlines

Knowing your tax deadlines can help you save since the Canada Revenue Agency (CRA) will charge you penalties if you file late and owe money. More importantly, filing early means you’ll get your refund earlier, so that’s cash back in your pocket. The most important dates are as follows:

• April 30 is usually the tax filing deadline for individuals. However, if that falls on a weekend, the date moves to the next Monday. This year, the tax deadline is May 1.
• If you’re self-employed, your tax filing date for 2023 is June 15. However, if you owe money, it must be paid by April 30, 2023.
• The electronic tax-filing service that sends your income tax and benefit return directly to the CRA: NETFILE, opened on February 20 for 2023, so that was the first day you could file your return.

Have your documents in order

Filing your taxes is easy if you have your documents in order. Some of the most common documents you’ll want to make sure you have, include:

• T4 – Statement of Remuneration Paid (employment income)
• T4A – Statement of Pension, Retirement, Annuity, and Other Income
• T5 – Statement of Investment Income
• Registered Retirement Savings Plan (RRSP) contribution receipt
• Charitable donations
• Childcare expenses
• Medical expenses
• Staycation credit
• Multi-generational home renovation tax credit
• US W-2 – Foreign Income

You would also need to have personal information handy such as your Social Insurance Number (SIN), spouse and/or child’s net income, last year’s tax return, and any documents from the CRA.

Since you might be dealing with many documents, you’ll want to start a folder – physical or digital – to keep everything organized throughout the year. TurboTax also has a helpful guide and document checklist to help you understand everything you’ll need to have handy when you file your taxes.

Contribute to your Registered Retirement Savings Plan

For every dollar you contribute to your Registered Retirement Savings Plan (RRSP), your taxable income is reduced by an equal amount (your net income is also impacted and can affect your eligibility for provincial and federal credits). For example, if you earned $50,000 last year and you contributed $5,000 to your RRSP, your taxable income for the year would only be $45,000. This is one of the best tax tips since there’s usually no better way to lower your taxes while saving for your future. For context, I started contributing to my RRSP as soon as I started working, and I have seen my portfolio grow significantly over the past two decades.

Claim the work-from-home tax credit

The work-from-home tax credit was introduced a few years back, and it’s still available. The flat rate method – where no receipts are required – allows you to claim $2 for each day, up to 250 days. That means you can claim a total of $500 in work-from-home expenses. It is possible to claim a higher amount, but you would need your employer to fill out form T2200S or T2200. In addition, you would need to keep all of your receipts, so plan to add these to the same folder as your other tax documents to ensure you have everything in one place!

There are many tax credits, deductions, and deadlines that many people aren’t aware of. I partnered with TurboTax and asked people on the street some tax questions. See how they did now.

Use a tax solution like TurboTax

TurboTax can help you get your biggest refund since it automatically searches more than 400 credits and deductions, so you get every dollar back. It also offers a wide range of innovative tax solutions to help you file your taxes with confidence, whether you do your taxes by yourself or get expert help:

• For investors, TurboTax Premier makes it easy to get your taxes done right no matter what kind of investment you have, including stocks, crypto or rental properties.
• Small business owners, freelancers, or those with a side hustle will benefit from TurboTax Self-Employed, which searches for industry-specific deductions personalized to you and your line of work, so you can keep more of your hard-earned money in your pocket at tax time.
• If you want to file your taxes by yourself, without being on your own, you can use TurboTax Assist & Review. You can get unlimited tax advice and file with confidence knowing an expert has reviewed your return. 
• TurboTax Live Full Service makes it easy to sit down from the comfort and privacy of your home and meet with an expert while they do your taxes for you. You’ll get matched with the best expert for your unique tax situation. If you have all of your documents ready, an expert can get your taxes done right, in as little as a day.

File even if you have low/no income

Many people assume that filing their taxes is not required if they have no or a low income. Even though you likely won’t owe any taxes, you still need to file every year since it’ll give you access to benefits and credits such as:

• Goods and services tax/harmonized sales tax (GST/HST) credit
• Climate action incentive payment
• Provincial and territorial benefits and credits
• Canada child benefit (CCB)
• Canada Housing Benefit Top-Up (must be applied for by March 31st)

In addition, even if you’ve earned just a minimal amount in the previous year, you would still earn RRSP contribution room when you file your taxes.

Child care is more than daycare

Many parents know that daycare and nursery schools count as child care expenses, but other types of child care can be tax-deductible too. This would include nannies, day camps, overnight camps, and sports schools. You would just need a formal receipt to make a claim. Private schools can also be deductible for children in Kindergarten as they’re not required to attend school until Grade 1.The school will issue a receipt detailing the amount eligible for child care.

Medical expenses can be claimed

There are more than 100 medical expenses that you can claim on your taxes. This would include things such as medical devices or out-of-pocket expenses you paid to a medical practitioner. For example, when my wife and I went through IVF to have our child, we spent more than $10,000 in medical expenses. Once our doctor provided us with an itemized receipt, we were able to claim our expenses, which helped reduce our tax burden for the year.

Self-employment expenses can offset your income

If you have any self-employment income (even if you have a full-time job), some of your business expenses can be claimed on your taxes. Some business expenses that self-employed individuals can claim include:

• Office supplies
• Bank fees
• Rent/mortgage payments
• Utilities
• Advertising
• Cell phone and internet charges

Generally speaking, if an expense is related to your business, you can likely claim it (or a portion of it) on your taxes. For example, let’s say you use your home internet 50% of the time for business-related purposes. That means you could claim 50% of your internet bill as a business expense.

Filing doesn’t have to be expensive

TurboTax is free for Canadians 25 or under until May 1, 2023* (subject to change). Even for those of us aged 25+, they too can access a real tax expert and, in one meeting, have their taxes prepared, signed and filed for an affordable price with TurboTax Live Full Service.

Ultimately, no matter what option you choose, TurboTax has a solution for everyone and their individual tax situation. Their team of experts can help you find every tax deduction you deserve, and double-check your tax return to help make sure it’s right.

Final thoughts

While knowing all of the above is great, no one is expecting you to know everything. When using TurboTax, you’ll have a team of experts that can help you search for the tax credits and deductions that are relevant to you, so you can maximize your return.

**For tax year 2022 products only. Filing must be completed by March 31, 2023 for Full Service and Assist & Review; May 1, 2023 for TurboTax Online. Age is determined as of December 31, 2022. If filing a spousal return, both spouses must be 25 or under as of December 31, 2022. Excludes Premium Pack.

That said, I get why some people dread getting an HST/GST number as it requires more paperwork on your end when you need to file your taxes. In addition, not everyone is clear about when you need to register an HST number. Here’s everything you need to know about how to get an HST registration number.

What is an HST number?

An HST (Harmonized Sales Tax) number is a formal number that’s required before you can start charging HST as a freelancer, self-employed individual, or small business owner. Even if you meet the requirements to charge HST, you can’t begin to charge it unless you’ve formally received your HST number.

HST applies to residents of Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. If you live in Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Saskatchewan, Yukon, or Quebec, you need a GST (Goods Services Tax) number. That said, you must also apply for QST if you’re a resident of Quebec. Some provinces may also require you to register for a provincial sales tax (PST) number.

When to register for a GST/HST number

Knowing when to register for an HST number can confuse many people since the language on the government website isn’t exactly straightforward. Basically, as soon as you exceed $30,000 in freelance, self-employment, or small business income in a calendar year, you have 29 days to register for a GST/HST number.

That $30,000 threshold only applies to your freelance income and does NOT include any money you make from your regular job. Alternatively, you can voluntarily apply for a GST/HST number whenever you want.

Once you’ve registered for a GST/HST number, you need to start charging GST/HST on all your invoices moving forward. Technically speaking, you also need to start charging taxes on the item that puts you over $30,000, but you can’t start charging until you have a GST or HST number. Generally speaking (and I’m not an accountant), most people will register for a GST/HST number immediately after crossing the $30,000 mark and then start charging taxes.

There is one situation where you would need to apply for a GST/HST number immediately. Anyone who operates ride-sharing services (Uber, Lyft, limousine operators) is considered a taxi business for GST/HST purposes. The CRA requires you to register before you start providing tax services. The collection of GST/HST is built into the fares, so you don’t need to worry too much.

Note that this mandatory GST/HST registration for ride-sharing services does not apply to deliveries such as Uber Eats. That said, once you reach the $30,000 threshold, you need to register for a GST/HST number and add it to your ride-sharing delivery account.

How to register for an HST number

Okay, so you want to know how to get an HST number. The actual process of getting an HST number is easy, but there are a few things you’ll need to prepare before you register.

• Basic information – You’ll need to provide information such as your name, date of birth, social insurance number, personal postal code, business name, business number, mailing address, etc.
• Effective date of registration – This date is typically when you pass $30,000 income in a calendar year. That said, taxi drivers would use the date they start offering transportation services. Those registering voluntarily would use the date they make the request.
• Fiscal year for GST/HST purposes – Generally speaking, most people will use the calendar year for which they’re filing taxes. For example, if you’re registering for HST in 2021, you will likely be filing taxes for the same year.
• Total annual revenue – The Canada Revenue Agency (CRA) wants you to provide an estimate of how much your yearly income is. Don’t worry about this being super accurate, as it won’t affect anything when you do your taxes later.

You must complete your registration in a single setting as information is not saved during the process. You’ll also be booted out if there are 30 minutes of inactivity. Don’t worry, the entire application only takes a few minutes.

To actually register for your HST number, you can do it via one of the following ways:

• Online via the CRA Business Registration Online page.
• By mail or fax (fill out form RC1 and mail or fax it to your nearest tax services office)
• By telephone (1.800.959.5525)

You must have a business number to apply for a GST/HST number. Don’t worry if you don’t have one yet, as one will be created for you at the same time you register for a GST/HST number. You’ll receive a confirmation right away along with your GST/HST account number so you can start charging taxes right away.

If you’re a resident of Quebec, you’d have to go through Revenu Québec. You can get your tax number online via their website, or you can call them at 1.800.567.4692.

What to do after you have a GST/HST number

Now that you know how to get an HST number, you can start charging your Canadian customers tax. How much you’ll charge depends on the province where the Canadian businesses operate. The following are the current tax rates in Canada.

• 5% (GST) – Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Quebec, Saskatchewan, and Yukon
• 13% (HST) – Ontario
• 15% (HST) – New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island

For example, let’s say you’re a freelancer based in Toronto, but your client is located in Calgary. You would charge them 5% for the services that you provide. Be sure to include your GST/HST number on your invoice, as many clients will require it. There’s no need to feel weird about charging your clients taxes. Any taxes they pay will offset any they collect, so it’s really no big deal for them.

It’s worth mentioning that GST/HST applies even if you don’t sell taxable goods. For example, if you’re a freelance graphic artists, you’d have to charge GST/HST once you’re registered.

GST/HST exemptions

Any clients that you have outside of Canada (non-residents) are considered zero-rated for tax purposes regardless of the type of business or commercial activities. As in, you don’t charge them any tax. You still need to claim the income. You just don’t charge any taxes. When you file your taxes, there will be separate sections for domestic and international income. Since you’d be reporting your global income, the CRA would understand that there are no taxes to be collected. Even if all your income comes from international sources, you’d still need to register for an HST number when you reach $30,000 in income despite the fact that you’ll never be charging taxes.

What to do with GST/HST collected

As soon as you start collecting GST/HST, you need to remember to put that money aside, as it needs to be paid back later. I recommend using one of the best high interest savings accounts in Canada, such as EQ Bank. You might as well make some interest for the time being.

You’ll also want to keep detailed records of all the GST/HST you’ve collected and paid. How you do that is up to you. Some people will do things manually with a spreadsheet, while others will use software. If you have any international clients that are zero-rated for tax purposes, you’ll want to note that since it’ll be relevant when you file your taxes. Hang onto all of these records for at least six years in case the CRA ever audits you.

When you file your taxes, you’ll file your GST/HST return at the same time. Basically, if you’ve collected more GST/HST than you’ve paid, then you owe the CRA GST/HST. This is known as input tax credits. If the amount you owe is less than $3,000, you’d just pay it before the deadline. However, if the amount you owe exceeds $3,000, the CRA will put you on calendar quarterly payments. You can pay your GST/HST through your bank (requires a remittance voucher) or via the CRA website My Business account.

Final thoughts

Knowing how to get an HST number is easy since it only takes a few minutes to get things done. Once you’re registered, you’ll want to make sure that you’re on top of your bookkeeping, so filing your taxes will be easy. Find a system that works for you and stick with it. For more information on taxes, check out my detailed guide on freelance taxes for Canadians.

How does the GST/HST credit work?

Most purchases in Canada come with goods and services tax (GST) included. In some provinces, GST gets added to the provincial sales tax (PST) to become harmonized sales tax (HST). How much these taxes cost will depend on what province or territory you live in. but there’s no denying that these taxes can hurt the bottom line of many people.

To help put money back into the pockets of those with modest incomes, the government offers a GST/HST credit. This money is a direct deposit that goes right into your bank account so that you can use the funds right away.

As long as you file your tax return, you’re automatically considered for the GST/HST credit.

How much does the GST/HST credit pay?

The amount each recipient will get depends on a few factors:

• Your family’s net income (your spouse’s or common-law partner’s income is combined)
• The number of children you have registered for the Canada child benefit (CCB) and the GST/HST credit

Assuming you qualify for the 2021 base year (payment period of July 2022 to July 2023), you’d be eligible up to the following maximum amounts:

• $461 for single individuals
• $612 if you have a spouse or are a common-law couple
• $161 for every child 18 years of age or under

What can affect your GST/HST credit amount

What some people may not realize is that HST credit payments could be recalculated under one of the following criteria:

• A tax reassessment of your family’s net income
• Your eligible child turns 19
• The number of eligible children changes
• A breakdown in your marital status changes
• A recipient dies
• You start, or stop, sharing custody of an eligible child

GST/HST eligibility

To be approved for the HST credit application, you must be a Canadian resident for income tax purposes the month before and at the beginning of the month in which the Canada Revenue Agency makes a payment.

In addition, you must meet one of the following criteria:

• You are at least 19 years old
• You have (or had) a spouse or common-law partner
• You are (or were) a parent and live (or lived) with your child

Since you must file your taxes to qualify for the tax credit, you also need a Social Insurance Number (SIN). Note that you don’t need to be a Canadian citizen to qualify for the GST/HST credit. You simply need to be a resident of Canada for income tax purposes.

Even if you have no income, you would still qualify for the GST/HST credit. You just need to file your taxes.

GST cheque dates

The GST/HST credit payment dates are as follows:

• January 5
• April 5
• July 5
• October 5

Due to inflation in 2022, the CRA issues a one-time additional GST credit payment to qualifying individuals and families. This additional credit would have been paid between November 4, 2022 and January 5, 2023. 

If you’ve set up direct deposit, the money will appear in your account almost immediately. However, if you’ve requested a cheque, it could take up to a few weeks before it’s delivered to you.

How to apply for the GST/HST credit

Canadian residents that have filed an annual tax return will automatically be considered for the GST/HST credit. If you qualify for the credit, the money will be sent quarterly.

New residents of Canada may also qualify for the GST/HST credit, but they will need to fill out a form first.

• RC66 (Canada Child Benefits Application) is for those who have Children
• RC151 (GST/HST Credit Application for Individuals Who Become Residents of Canada) would be used for those who do not have children.

If you’ve already applied for and received the Canada Child Benefit (CCB), then you could claim their GST/HST credit at the same time. 

For those who haven’t applied for the CCB yet, you could do so via your CRA My Account. Just look for the section that says “apply for child benefits.”

Additional provincial and territorial programs

Depending on the province or territory you live in, you may qualify for additional programs if you’re eligible for the GST/HST credit. The extra programs that you may qualify for include:

• British Columbia climate action tax credit
• New Brunswick harmonized sales tax credit
• Newfoundland and Labrador income supplement
• Newfoundland and Labrador seniors’ benefit
• Northwest Territories cost of living offset
• Nova Scotia affordable living tax credit
• Prince Edward Island sales tax credit
• Saskatchewan low-income tax credit
• Yukon government caron price rebate

There’s also the Ontario sales tax credit, but that’s issued separately from the GST/HST credit.

The good news is that OnlyFans taxes for Canadians is quite simple, and you can file on your own to keep things low-key. Another positive thing about being self-employed is that you can write off some of your expenses, which may reduce your tax bill. Here’s everything you need to know about filing your taxes as an OnlyFans performer.

Understanding your payments

Canadian content creators should be getting 80% of their revenue from OnlyFans. The 20% that’s held is their fee. When it comes time to file your taxes, you should technically be claiming the full 100%, but the 20% fee could be claimed on Line 8871 – Management and administration fees.

For example, let’s say your total earning is US$10,000 for the previous year and OnlyFans took their standard 20% cut which is US$2,000. You’d be able to claim that $2,000 as an expense.

That said, I’m guessing that if you just claimed the 80% as your gross income, the CRA isn’t going to put up a stink. For disclosure purposes, I’m not an accountant, so you should refer to one if you want a definite answer.

OnlyFans is based in the United Kingdom and they have a tax treaty with Canada. That means you don’t need to pay them any taxes as long as you’re filing in Canada.

Claim your business expenses

Generally speaking, you can claim any expenses that are related to your business when you file your taxes. As an OnlyFans creator, you’ll likely have costs such as your rent/mortgage, cell phone bill internet, computer hardware etc. Even things such as lights, cameras, outfits, lube, subscriptions and toys would be considered legitimate tax deductions.

The key thing to understand is that you can only claim the percentage related to your business. For example, let’s say 75% of your internet usage is for work and 25% is for personal use. In this case, you’d only be able to claim 75% of your internet bills as a business expense. Another example would be your office space. If your setup takes up 15% of your home, you could claim 15% of your rent/mortgage as a business expense.

Any money you spend on advertising or office expenses would also be obvious business expenses. One of the biggest mistakes freelancers make is not claiming their business expenses.

Note that any money you lose due to currency conversion fees would qualify as a business expense. You just need to do your own record keeping as OnlyFans won’t do it for you. Basically, you’d have to look at the exchange rate that the conversion currency company charges you, and then compare it to the spot rate posted on xe.com. That difference is what you could claim as a fee.

If you’re going to claim any business expenses, you need to keep your receipts. These receipts validate your costs and will be helpful if you ever get audited. Besides hanging onto your receipts, you’ll want to create a log of your expenses, so when you do your OnlyFans taxes for Canadians, things will be easier.

The key thing to understand here is that the CRA simply wants you to pay your fair of taxes. If you’re filing your taxes and paying what you owe, the CRA won’t care. Now, if you’re claiming say $5,000 in expenses and you’re only making $6,000 in income, they may take a closer look at your return so be honest.

Your location matters

Another aspect of the tax system to be aware of is where you’re located. If you’re Canadian and performing in Canada, then everything in this article applies. However, if you’re Canadian and performing anywhere else, such as the United States, the local rules will likely apply.

Let’s say you’re working remotely in another country on a work visa, their tax system would likely apply to you. Now let’s say sex work is illegal in the country you’re in. Performing on OnlyFans presents a bit of risk if you want to be honest.

You really need to pay attention to the rules of the country you’re in to ensure you’re not breaking any laws. Let’s say you’re on vacation in the U.S. and you want to do some shoots during your downtime. Well, unless you have a work permit, you’re breaking the law. If you’re caught, you could be banned from entering the U.S. in the future.

Another practical example is if you’re on a student visa that limits the number of hours you work and where you work. You could easily be breaking the terms of your visa by performing on OnlyFans. It’s up to you to make a judgement call about your work, but you should at least be aware of any potential consequences.

Fill out the T2125 form

The T2125 is a Statement of Business Activities form used by self-employed individuals. This form is where you would claim your expenses. The income you earned minus your costs is how your net income is calculated.

Don’t worry if you still have a day job. Income from OnlyFans just gets added to your overall income. It’s really no different from someone who drives Uber on the side or a content creator on different social media platforms.

The T2125 is available in every tax software out there, so it’s not like you need to print out a specific form and include it in your tax return (unless you’re doing things by hand). When you say you have self-employment income, the tax software will prompt you with the appropriate things you need to include, so it’s unlikely you’ll miss anything.

Registering for a GST/HST number

Changes to Canadian law now require OnlyFans to apply SalesTax to transactions. This new change took place as of Jul 1, 2021. OnlyFans collects GST/HST from users depending on where they live. For example, if they’re from within Canada, they’d be charged GST/HST. That money collected is only for OnlyFan’s tax requirements. TO be clear, OnlyFans does not pay taxes on your behalf.

As a Canadian freelancer, you’re required to register for a GST/HST number when you earn CA $30,000 of income in any given year. Once you’ve registered, you need to start charging taxes for your services. The problem is, OnlyFans doesn’t allow you to input your GST/HST number, so you’re not able to collect taxes.

Unfortunately, as far as the CRA is concerned, you should be charging taxes. Content creators have confirmed that you only need to remit sales tax on your net sales (what you make after OnlyFans takes their cut). You also wouldn’t include any tips or gifts you’ve made.

For example, let’s say you reside in Ontario, and you’re registered for HST. You have a total earnings of $50,000. That’s after OnlyFans cut and it doesn’t include your tips from your subscribers. In reality, you actually earned $44,247.79 in income and collected $5,752.21 in HST.

While this is clearly annoying as you’d lose 20% to OnlyFans, up to 13% in sales tax, and the regular taxes you pay on your income. If it feels like you’re being double taxed, you’re not wrong. But until the CRA sorts this out with Fenix International Limited, you’re going to need to pay it. For reference, other for hire sites allow Canadians to input their HST number to collect taxes on services. OnlyFans does not.

OnlyFans has this FAQ page that talks about taxes, but it doesn’t go into many details.

In most cases, using the quick method to calculate HST instead of the regular method will be better for content creators. Not only will it reduce the amount of work required, but it’ll also likely reduce how much HST you owe.

Canada Pension Plan contributions

If your self-employment income is more than $3,500, you’ll be required to pay both the employer and employee portion of CPP. In 2020, that rate was 10.5%, with a maximum yearly pensionable income of $58,700.

This amount is offset by any business expenses you can claim, so keeping records is important.

Using your credit card for business

If you want to keep your business expenses separate from your personal expenses (especially if you have a joint credit card with someone), you’ll likely want to get your own credit card.

As long as you have a credit history, getting a credit card won’t be difficult. However, premium credit cards typically have a higher annual income requirement for you to qualify.

Alternatively, you could get a business credit card such as the American Express Business Platinum Card. By having a dedicated credit card that you use just for your business, you can manage your expenses easier (and keep them private). Note that the annual fee for your business card may qualify as a business expense.

Another solution is to get a KOHO card. KOHO is a prepaid credit card that uses the Visa network, so you’ll be able to use it just about anywhere. What makes it appealing to content creators is the fact that it can be discreet. Once you get the actual card from KOHO, you’ll never get any paper statements. That said, you can obviously check all your transactions directly from the app. You can also set up direct deposits directly to the card. In other words, you can keep your finances completely separate from your regular bank account.

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When you should use an accountant

If you’ve logged all your income and expenses, you can likely fill out your OnlyFans taxes for Canadians on your own via software. TurboTax Self-Employed is specifically designed for self-employed individuals and comes highly recommended. **Note that I’m giving away four free TurboTax codes. Read this TurboTax Review for the details.

It’s pretty common for younger people to have their taxes filed by a family member. As I’ve stated, filing your own taxes is easy, so just telling your family member you want to learn to do things on your own really isn’t a weird thing.

Some people may prefer to use an accountant to file their taxes. This can be a good idea if you want assistance from a professional who can advise you on all things tax-related. While you may feel weird going to a professional as a sex work professional, accountants do not care. Tax laws are pretty black and white. Your chosen line of work does not change anything.

Another option is to use TurboTax Live Full Service. For $129.99, you can have an expert file your taxes on your behalf. You just need to provide any relevant documents. This can be handy since you don’t need to leave your home and it’s cheaper than an accountant.

Going to a professional is also beneficial to anyone who normally uses friends or family members to file their taxes. The last thing you want is for that friend or family member to gossip about what you do.

How much should you save for taxes?

In Canada, we have a marginal tax rate. The more money you earn, the more personal income tax you’ll pay. Generally speaking, setting aside 25% of your income for taxes is a good start. However, if you make a high income from OnlyFans or still have a day job, you’ll likely need to budget more since you may be in a higher tax bracket. For example, if you earned $120K, you’ll likely pay closer to 30-35% in taxes, so you should set aside $40K for tax purposes.

It’s a good idea to set up a bank account with a digital bank such as EQ Bank. This way, any money you set aside for taxes can earn you some interest for the time being. EQ Bank has no monthly fees and can connect directly with any of your other banks. If you left your money in a regular bricks and mortar bank, it would just be sitting there not earning you anything. Also, having a digital bank account ensures no family member sees your income if you currently only have a joint bank account.

How to reduce your exchange fees

One major issue for Canadian content creators on OnlyFans is how they get paid out. Right now, your options are as follows:

• Paxum – ewallet
• Cosmo Prepaid Mastercard
• Skrill
• Local currency bank payment

A local currency bank payment is the cheapest way to convert the U.S. Dollars you get to Canadian dollars, but it takes a few steps. First, see if your regular bank has operations in the U.S. If they do, you can open a U.S. domicile bank account with them. For example, TD Bank has branches in the U.S. You could get TD Canada to set you up an account in the U.S. For a detailed guide, read this article I wrote on TD Cross Border Banking.

Once you have that account set up, you can deposit your pay directly. Now, to minimize your exchange fees, you’d want to sign up with Wise. With wise, you get some of the lowest exchange rates. That means you can transfer funds from your U.S. bank account to a Canadian bank account almost instantly without having to pay a huge amount in fees. This is ideal for people who are making frequent smaller exchanges.

On the other hand, let’s say you’re exchanging huge amounts. As in, $10,000+ at a time. In this case, it might be worth the trouble to do Norbert’s Gambit since it’s the cheapest possible way to exchange USD for CAD dollars.

Incorporating your business

If you’re a high-income Onlyfans content creator, you may want to consider incorporating (instead of being a sole proprietor). Although it takes a few steps to get set up, the tax savings are considerable. FBC recently reached out and shared how they got some of their clients incorporated for OnlyFans.

1. Hire a lawyer to do your incorporation (it is better to pay extra money now) if you make a mistake a lawyer will be needed to fix it and will charge even more.
2. When incorporating make sure the share structure is correct Fenix International requires that the Performer be at least 51% shareholder. In the case of couples whoever’s name is on the original account must be the 51% shareholder and sole director (this is to protect performers from illegal trafficking)
3. With a corporate return, you should also have an accountant T2 (corporate tax return is much more complicated than a T1(personal tax return)
4. After getting your professionals in order you will need a bank account in the companies name (you will have to disclose the nature of your business to the bank)
5. You must contact Fenix international to let them know you have incorporated and they will ask you for your certificate and articles of incorporation.
6. You must have all money come from Fenix to your corporate bank and any money left inside the company is taxed at 9% federally and whatever your provincial rate is the largest in Canada in Ontario at 3.2%
7. You then come up with a plan with your accountant and financial advisor on how best to take your money out of your corporation or invest within your corporation every situation is different.

Final thoughts

OnlyFans Taxes for Canadians is no different from freelance taxes for Canadians or self-employment taxes. In the eyes of the CRA, OnlyFans, you’re just another independent contractor. As long as you’re filing your income tax return and your tax obligations are being paid, the CRA will not care. There’s no shame in what you do. You should be proud of the business you’ve built.

What is an RRSP?

To quickly summarize, an RRSP is a type of registered account that is used for retirement savings in Canada. For every dollar you contribute, your taxable income is reduced by an equal amount. 

Once your money is in your account, you can purchase investment products such as mutual funds, exchange-traded funds, stocks, bonds, guaranteed investment certificates, and more.

Any capital gains or interest earned within the account is completely tax-free. However, when you eventually withdraw the money from your account, you’ll pay tax at your marginal tax rate (provincial taxes + federal taxes). The assumption is that you’ll be in a lower tax bracket when you retire, so you’ll pay fewer taxes overall.

RRSP contribution room is calculated at 18% of your previous year’s income, up to a yearly maximum. Any unused RRSP contribution space gets carried forward indefinitely.

RRSP withdrawal rules at 71

All RRSPs reach maturity on December 31 of the calendar year you turn 71. At this time, any resident of Canada with an RRSP must decide between three options. Each option has different tax rules to be aware of. 

Convert your RRSP to a RIFF

RRSP withdrawal rules at 71 starts with you converting your RRSP to a Registered Retirement Income Fund (RRIF). This is a simple process, but note that once you’ve converted to a RRIF, there’s a minimum amount that you must withdraw each year. 

These minimum withdrawals are subject to withholding and income tax. Like a regular taxpayer, if you’ve overpaid, you’ll get your money back when you file your taxes. 

Purchase an annuity

Although not as popular, you can convert your RRSP to an annuity. This would give you a guaranteed income for life or a specific period. You won’t pay any taxes when purchasing the annuity, but you would get taxed on any income you get paid.

Once you pass away, the payments obviously stop. In most cases, that’s the end of the funds. However, there are some annuities you can purchase that include a beneficiary clause.

Take out all your cash

Technically speaking, you could withdraw all of your money from your RRSP. The problem is you’d be subject to your withholding tax rate, and the entire amount is taxable. The highest income bracket in Canada is over 50%, so you could pay a lot of taxes if you go this route.

RRSP early withdrawal penalty

RRSP withdrawal rules come with potential penalties. You can access the funds within your RRSP at any time, but you’d face an RRSP early withdrawal penalty. This is known as a withholding tax and would be applied by the financial institution where your RRSP is being held. 

The current tax rates on RRSP withdrawals are:

• Up to $5,000 withdrawn – 10% (5% in Quebec)
• $5,001 to $15,000 withdrawn – (10% in Quebec)
• $15,001+ withdrawn (15% in Quebec)

Non-residents of Canada must pay a flat withholding tax rate of 25% on any withdrawals. Also, note the other part of the RRSP early withdrawal penalty is the permanent loss of the contribution amount. In other words, if you withdraw any amount without a qualifying reason, you lose that RRSP space forever.

How to make RRSP withdrawals without paying taxes

There are a few situations where you can make RRSP withdrawals without paying taxes. That said, each method has its own rules and may require repayments. Fortunately, each method is for a specific reason, so it can benefit you in multiple situations.

Home Buyers’ Plan

The Home Buyers’ Plan (HBP) allows you and your spouse or common-law partner to withdraw up to $35,000 each from your RRSPs to be used as a down payment on your first home.  The Canada Revenue Agency (CRA) won’t charge the withholding tax when using HBP, so you’ll get the full $35,000 whenever needed.

The HBP does need to be repaid over fifteen years. Payments start two years after you withdraw the funds, and the minimum payment is 1/15 of what you withdrew. For example, if you withdrew $30,000 in 2023, you’d have to repay at least $2,000 every year, starting in 2025. You’d simply mark this as a repayment on your tax return. You do not get an additional tax deduction when making repayments.

Lifelong Learning Plan

The Lifelong Learning Plan (LLP) allows you to withdraw up to $10,000 annually, up to a lifetime maximum of $20,000. You must be pursuing a full-time education (part-time if you have a disability) at a qualifying post-secondary educational institute to access the LLP.

Similar to the HBP, there are no withholding taxes for the LLP. You only get 10 years to repay the LLP. Payments start the second year in which you no longer qualify for the LLP (usually when you’re no longer a student). Repayments would be 1/10 of what you withdrew.

Transfer to the Tax-Free First Home Savings Account

The Tax-Free First Home Savings Account (FHSA) is expected to become available in April of 2023. At that time, you can contribute up to $40,000 ($8,000 per year) into the account to be used to purchase your first home. The FHSA is basically an upgrade of the HBP. The major advantage is you get the benefits of an RRSP and Tax-Free Savings Account (TFSA) combined.

The RRSP withdrawal rules state that you can transfer funds from your FHSA to your RRSP tax-free. Contribution limits still apply, and you would not get an additional tax break.

The basic personal amount 

Every current tax year, the government gives taxpayers a basic personal amount (BPA). No taxes are required until you reach this amount. For example, for the 2022 tax year, the federal BPA was $14,398. In addition, there’s a provincial version. The BPA in Ontario for 2022 was $11,141. That means residents of Ontario would have a combined BPA of $25,539 for 2022.

Let’s say you have a year where you’ll be making no or low income (such as maternity leave). You could withdraw funds from your RRSP to give yourself income. Although withholding taxes would apply, you would get your money back when you file your tax return. Note that you would permanently lose the contribution space on any funds withdrawn. This is a little-known trick that can help Canadian residents that need income badly.

Spousal RRSP withdrawls

Spousal RRSP withdrawal rules are similar to a regular RRSP, but they’re a little different due to the way the account is set up. Withdrawals can only be made by the annuitant. You’d also have to convert to a spousal RRIF by the end of the current year in which you turn 71 (or one of the other options listed above).

It’s worth mentioning that any spousal RRSP contribution must stay in the account for the remaining calendar year plus two more years. Once that time has passed, the funds can be withdrawn and taxed accordingly under the annuitant. If you were to withdraw the funds before that timeline, the contributor would be taxed on the withdrawal. This is known as the attribution rule.

How much tax you’ll pay on RRSP withdrawals

In the end, RRSP or RRIF withdrawals count as taxable income. The amount you’ll pay depends on your marginal tax rate. If you have a high income even in your retirement years, you’ll pay more taxes than someone that’s earning a lower income.

One thing that worries people is that their RRSP withdrawals may affect their Old Age Security (OAS) payments. That’s because if you have a high income, your OAS will see a clawback. I wouldn’t worry too much about this since earning too much money in your retirement years is not a bad thing. Note that there is no Canadian Pension Plan (CPP) clawback based on income.

Are you wondering how is cryptocurrency taxed in Canada? With the explosion of Bitcoin, Ethereum, and whatever other cryptocurrencies that currently exist or will come to exist, many people are starting to invest. There’s money to be made (or lost), and you need to pay your fair share of taxes.

If you invested early, you could have easily become a millionaire. As with any hot investment, many Canadians are trying to jump on the bandwagon so they too can make a fortune. Regardless of how much profit these investors make, they’re going to have to eventually deal with taxes. Below you’ll find some common questions and scenarios when it comes to cryptocurrencies in Canada and how to deal with them. If you’re new to cryptocurrency, be sure you read this post on the 7 things you need to know about cryptocurrency before you start investing.

How is cryptocurrency taxed in Canada?

Cryptocurrency is taxed like any other commodity in Canada. 50% of the gains are taxable and added to your income for that year. Let’s say you bought a cryptocurrency for $1,000 and sold it later for $3,000. You would have to report a capital gain of $1,000 (50% of $2,000) which would be added to your income and taxed at your marginal tax rate.

Note that the above scenario applies to normal buy and hold investors. If you’re a high volume trader e.g. someone who holds cryptocurrencies for a short period of time or day trades them, the CRA may consider it a business and you’ll have to file your taxes accordingly.

Most people who invest in cryptocurrency aren’t going to buy and hold. They’ll likely be trading it around. While you don’t get taxed for owning crypto, there are events that are taxable such as:

• Selling or gifting cryptocurrency
• Trading or exchanging the cryptocurrency for another cryptocurrency
• Converting cryptocurrency into fiat
• Using crypto currency to buy goods

Every time you buy, sell, or trade cryptocurrency, it’s a taxable event and needs to be reported on your taxes. There is no way around this so do keep detailed records.

Buying goods or cryptocurrencies with cryptocurrency

Here’s where things get a touch complicated. You’re required by law to keep records of your trades. If you didn’t keep records, you need to make your best guess and hope the CRA doesn’t audit you.

These records are vital due to the capital gains you make. Now keep in mind that capital gains can apply in more than one circumstance.

Let’s say you bought 1 Bitcoin for $100 but it has a current market value of $15,000. You decide to make renovations to your home and the contractor agrees to trade his services which are normally worth $15,000 for 1 Bitcoin.

In this case, both parties are liable for taxes. The original Bitcoin owner would pay capital gains on $7,450 (50% of $14,900) while the contractor would still need to report business income of $15,000. The CRA covers the details of taxes for this transaction in this post.

When trading entire amounts, things are easy. However, if you purchase cryptocurrencies at various times at different prices, you need to log all those transactions and calculate your adjusted cost base when selling later.

Moving cryptocurrency from one wallet to another

If you’re simply moving your cryptocurrency from one wallet to another e.g. from Coinbase to GDAX or your own wallet then it would not be a taxable event as long as you haven’t sold any of your cryptocurrency during the process.

That being said, there might be some tax implications . . . sort of.

Let’s say you paid a $10 transfer fee, well that would be a transaction cost which you could deduct from your capital gains later. The same applies to any fees you incur when you buy or sell your crypto.

Keeping records of your transactions

Many cryptocurrency exchanges have terrible records, so you shouldn’t rely on them to get all of your trading history. You’re better off keeping a detailed summary of all the trades you make. Start a spreadsheet and start tracking the following:

• Transaction dates
• Buy, sell, and trade values
• Units bought, sound, or traded

When possible, you’ll also want to keep records of the following:

• Receipts of purchase
• Digital wallet records
• Cryptocurrency addresses when trading with other individuals
• Exchange records

Basically, you want to keep as many detailed records as possible. There’s nothing illegal about owning or trading cryptocurrency, but the CRA wants their fair share of taxes. To calculate what you owe, you’ll need all of your records. They’ll also be handy if you ever get audited.

Cryptocurrency tax breaks

There are a few situations where you can use cryptocurrency to lower your taxes. Any capital losses from cryptocurrency can offset any capital gains. To be clear, this only applies if you have capital gains to claim. If you went all YOLO with your savings on cryptocurrency and lost everything, you wouldn’t be able to claim that to reduce your income.

If you run a cryptocurrency business such as mining, trading, or an operating an exchange, you could claim any relevant business expenses on your taxes. That could include things such as utilities, rent/mortgage, computer equipment.

Should I use an accountant?

If you’re unsure about how to handle your taxes, speak to an accountant who has experience with cryptocurrencies who can guide you through the process or file your taxes on your behalf. That said, they’re still going to need some kind of paper trail to help you out.

Another solution is to try TurboTax Live Full Service since you’ll get access to a tax expert who can file on your behalf. You can ask them as many questions as you want and you only get charged when you actually file.

Trading cryptocurrency in your TFSA and RRSP

With any potential capital gain, investors will always try to shelter themselves from taxes. The next logical question people ask is can I trade cryptocurrency in my TFSA and RRSP?

No, you can’t. Nor can you transfer any Bitcoins you currently have into your TFSA or RRSP. Cryptocurrencies operate on their own exchange which does not tie any accounts which are tax friendly. That said, there are now cryptocurrency ETFs that can be purchased within your TFSA or RRSP.

What if I don’t report my cryptocurrency gains?

You’d be breaking the law, it’s called tax evasion which is a crime that could get you sent to jail. The CRA likely won’t go as far as sending you to jail, but they do want to ensure that they’re getting their cut.

If you fail to report your taxes or you file incorrectly, the CRA could charge you penalties and interest later which could cost you a fair amount of money. Considering how big of a deal cryptocurrencies are right now, there’s a good chance that the CRA is keeping an eye on things.

You may think that these transactions can’t be traced back to you, but user names exist and so do the exchange records.

How does cryptocurrency affect my credit score?

Your decision to invest in cryptocurrency has no effect on your credit score whatsoever. Your credit score only gets affect when a lender needs to look at your credit history or if you currently have a contract in place where you need to make regular payments. For example, applying for a new credit card, or your payment history with your wireless provider would affect your credit score.

Even though cryptocurrency doesn’t affect your credit score directly, that doesn’t mean you shouldn’t know where you stand. Your credit score is a number between 300-900. The higher the number, the more creditworthy you are. This is essential if you ever need a loan in the future as lenders want to know that they can trust you to repay the loan. If you want to know what your credit score is, you can check it for free with Borrowell.

Final thoughts

How is cryptocurrency taxed in Canada is not an easy question to answer as there are many different things to consider. Canada’s tax system is fair, don’t try to cheat it unless you enjoy committing fraud. Note that if you get a Cryptocurrency credit card, technically the rewards would be taxable too.

Tax time has come again after what has been another difficult year for many Canadians. Continued lockdowns and restrictions mean that plenty of Canadians have continued to pivot when it comes to their work. For some, it meant starting a new job, for others working from home, and even more have started a side hustle to bring in some extra income. But, now that tax season is in full swing many Canadians are hesitant and wondering how to file their taxes, and if they will be more complicated with these life changes.

The good news is that despite any changes in your life, your taxes do not have to become overwhelmingly complicated. Not if you use TurboTax. This tax software allows Canadians with all types of tax returns to file their taxes easily online from the comfort of their home. Whether you are a student, a freelancer, or even an investor with an interest in cryptocurrency, TurboTax can work for you. In this TurboTax Canada review, I’m sharing everything you need to know. Plus, check out the bottom of this post for the TurboTax Canada giveaway.

TurboTax features

So, what makes TurboTax Canada the number one tax software program in the country? Without a doubt, the features play a huge role. TurboTax offers a lot to users to help make the process of doing your taxes quick, easy, and stress-free. Here are some of the key features:

Auto-Fill My Return: Cut down the time spent on doing your taxes by allowing TurboTax to gather necessary information from your CRA My Account. TurboTax can download these slips and documents to your file, so you don’t need to add them manually. This can include many T slips, benefit slips, and RRSP contribution limits. It makes things easier and faster.

Built-In Support: All TurboTax users have access to some level of support. The software itself has plenty of support built right into the program as you go. If you need more assistance, take a look through the community forum. And, as I will discuss later on in this TurboTax Canada review, there is the option to pay extra for professional help. TurboTax professionals have, on average, over 10 years of experience. 

RRSP Optimizer: Not sure how much to contribute to your RRSP? TurboTax’s RRSP Optimizer will allow you to see how different contribution amounts will affect your refund.

Audit Defence: This is an add-on but, should you be audited by the CRA, a tax professional will jump in and deal with the CRA on your behalf.

NETFILE Integration: TurboTax is certified by CRA NETFILE. This means once you have completed everything you can file with the click of a button and know that all your information is being handled safely and securely. It also means you will get your refund sooner if you have set up direct deposit (usually within 8 business days).

Guarantee: TurboTax Canada guarantees 100% accuracy. This means that if you pay a penalty because of a TurboTax miscalculation, they will reimburse you the penalty plus interest. In addition, if you get a larger refund or a lower tax due amount from another tax preparation, TurboTax will refund you the price paid (Free users will get $9.99).

How much does TurboTax cost?

The price for TurboTax will depend on which product you use. As said earlier, TurboTax has a variety of products to best fit your personal tax situation and they are all priced differently. Here’s a breakdown of the different TurboTax products and their pricing structures. Not quite sure which one to use? This year, TurboTax will guide users to the product best suited to their situation.

Free: $0 per return

TurboTax is free for Canadians with simple tax situations, no matter your income level. That’s right, it’s completely free with no hidden fees. But don’t worry, just because it’s free doesn’t mean it is lacking. As long as you don’t need any of the additional features offered from the paid versions, TurboTax Free is still set to get you the best refund possible and can handle student credits, RRSP contributions, COVID benefits and repayments, and more.

Deluxe: $19.99 per return

The next option is TurboTax Deluxe which includes everything in the free model plus some additional bells and whistles. With TurboTax Deluxe you will have more options to maximize more tax deductions and credits. This includes things like donations, employment expenses, and medical expenses. This version will automatically search over 400 credits for you to choose from and identify tax-saving opportunities for the best refund (or lowest amount due).

Premier: $34.99 per return

TurboTax Premier is for individuals who have investments and/or rental properties. Investments can include stocks, bonds, and even cryptocurrency. This version will cover all capital gains and losses and can also handle foreign income. Plus, it comes with all the additional features included in the Deluxe version so you can ensure your taxes are being optimized for the best results.

Self-Employed: $44.99 per return

Whether you are self-employed full-time or have a part-time side hustle, TurboTax Self-Employed has the added advantages of being able to search for industry-specific deductions to get you the best tax outcome. It covers all types of work from real estate to online sales to ride-sharing and more.      

TurboTax Assist & Review

TurboTax is straightforward and easy to follow, however, if you’re unsure or just want another set of eyes to check things over for you before you file, then you can upgrade to TurboTax Assist & Review. These options do cost more, however, it might be worth it for the peace of mind. Pricing for TurboTax Assist and Review is as follows:

• Assist & Review Basic: $39.99/return
• Assist & Review Deluxe: $69.99/return
• Assist & Review Premier: $89.99/return
• Assist & Review Self Employed: $109.99/return

TurboTax Live Full Service

Don’t want to do your taxes yourself? Then you can choose TurboTax Live Full Service where a seasoned tax expert will do your taxes from start to finish. Of course, these options will cost more, however, if you really hate doing your taxes then they might be worth considering. Pricing depends on how complicated your taxes are and are as follows:

• Live Basic: $69.99/return ($89.99 as of April 1, 2022)
• Live Deluxe: $99.99/return ($129.99 as of April 1, 2022)
• Live Premier $149.99/return ($179.99 as of April 1, 2022)
• Self Employed $249.99/ return ($279.99 after April 1, 2022)

If you’re a Canadian under the age of 25, all versions of TurboTax Online, Assist & Review or Full Service are free of charge.

TurboTax Review

So, how does TurboTax perform? Here’s a run-through of what you can expect when using TurboTax.

If you have used a paid version of TurboTax before, you can log in with your existing credentials. If you are new, you can just click the ‘get started’ button.

You will then be asked what kind of tax solution you are looking for with the option of:

• Personal Taxes
• Tax prep by an expert
• Self-employed tax software
• Download tax software

For this TurboTax Canada review, we’re going to click on Personal Taxes.

You can then pick between Free, Deluxe, and Premier. You’ll want to choose the option that best suits your needs but for the sake of this TurboTax review, I’m going to use the free option.

At this point, you’ll be asked to create an account which means entering some personal information and creating a log-in. With your login credentials, you can leave TurboTax at any time and come back to complete your file as needed. It auto-saves along the way after each page so you don’t have to worry about losing any information.

Your tax return will start with an interview. You’ll be asked who you’re filing for, your marital status and if you financially support anyone else. As you progress through there will be buttons that says ‘Guide Me’. If you are unsure of something, you can click on that button and be taken to another page with more detailed information on that topic.

Next is personal information including your name, date of birth, address, and Social Insurance Number. You’ll also be asked for your NETFILE access code (this can be found on your NOA from the previous year) and asked questions about your status as a citizen in Canada. Once this interview section is complete, you’ll be taken to a page with a summary of your answers to check over and edit if needed. If not, continue.

After your interview section, you will start the tax profile. Guided by step-by-step instructions you will fill out all information pertaining to your income, then a section for RRSPs, then a section for any deductions you might be eligible for. There are prompts along the way to ensure that TurboTax covers all possibilities relating to your individual situation in an effort to get you the best tax outcome possible. It’s very straightforward and easy to follow but, don’t forget, if you have questions you can always look for the ‘Guide Me’ buttons.

Once you have finished the section on credits and deductions you will be able to do a final review. When you have completed that you can pay TurboTax (assuming you used a paid version, remember simple returns are free) and submit your return via NETFILE.

Is TurboTax safe?

While you can never 100% guarantee online safety TurboTax has plenty of safety features in place to keep your personal information protected. This includes using multi-factor authentication so you can securely sign in to your account as well as data encryption. TurboTax is also CRA certified which speaks to its safety as well.

TurboTax pros and cons

Turbo Tax is a great tax software program, but it’s not perfect. Here are some of the main pros and cons to be aware of.

TurboTax Pros

• Easy to use
• Offers three ‘categories’ of support: file your own, with an expert’s help, or pass it off to an expert from start to finish
• Auto-fill my return
• Guaranteed maximum refund
• Safe
• CRA certified

Cons

• Not the cheapest tax software option on the market

Is TurboTax worth it?

So, we’ve reached the end of the TurboTax Canada review and the final question is: is TurboTax worth it? I say yes.

I’m a self-employed dad. I have a lot going on in my life at the best of times, but these past two years have been extra busy with lockdowns and school closures that keep my daughter home from school. Quite frankly, juggling full-time work and taking care of my daughter means that I don’t have the time to stress and worry about taxes. But TurboTax makes it easy. The process is easy to follow, I know that the program will meet my needs and trust that it will find and maximize any credits so I get the most beneficial results possible.   

TurboTax 2022 Giveaway

Four lucky readers can enter for a chance to win a complimentary tax code, valid for ANY online tax product at turbotax.ca, valued at up to $279.99 each! To enter, leave a comment below by March 31, 2022. If you’d like another entry, follow me on Instagram: barry_choi.

Who can register a business in Canada?

Most people assume that in order to have a business in Canada you need to be a citizen or resident. This is actually not the case. You do not have to be either to open a business or a branch in Canada. That being said, you will be taxed higher than a business registered by a Canadian citizen or resident, but the lack of either of those statuses will not prevent you from registering a business in Canada.

How do I register a business in Canada?

Registering a business in Canada is fairly simple, but there are a few things to do first. Before you start the process, you will need to have the following information on hand.

Your location

This is where the main office of your business will be located.

Your area of operation

What provinces, outside the one in which your main office is located, do you plan to operate in.

Your business name

You’ll want to choose a name that reflects what your business is about plus something that is easy to remember. Once you think you have chosen the name you want, you need to check and make sure that the name isn’t already taken. To start with, you can search the internet to see if anything else comes up. Once you have done that, you can search national name databases. There are two main name databases in Canada. The first is the Canadian Corporate names and Trademarks Database (Nuans) which you can find here. The second is Canada’s Business Registries which you can find here. Keep in mind that registering your business name doesn’t give you exclusive rights to use it. For name protection, you will need to trademark it.

Your type of business

What type of business best suits your purpose and needs? There are four main options to choose from.

• Sole proprietorship
• Partnership
• Corporation
• Cooperative

Once you have all that sorted it’s time to register. You can register your business in Canada online, over the phone, by mail or even by fax depending on what you are most comfortable with. The Government of Canada has all the details for whatever route you choose to go on this page here.

After you have registered your business, you will receive a business number. This number is 9 digits unique to your business. For Canada Revenue Agency (CRA) program accounts, you will also be assigned 2 letters and 4 digits attached to your business number. These are only used in specific circumstances when the information must be reported to the CRA.

If at any point you want to change the legal ownership of your business or change the structure of your business, you might be required to register for a new business number.

Once you have your business number set up and registered you can then look into any required licensing and permits. You may also be eligible for financing or grants. Finally, you may also want to consider incorporating your business, either federally or provincially. This is a more costly process than just registering your business and requires more work to set up and maintain. However, it comes with a lot of advantages as well.

Do I have to register my business in Canada?

While there are many advantages to registering your business in Canada, not all businesses need to be registered with their province. If your business is a sole proprietorship and you are only using your legal name as your business name, then you don’t need to officially register your business. In Newfoundland and Labrador, you don’t need to register your business if it’s a partnership either. However, depending on where you are located and the type of business, you may still need to register your business within your municipality. If you are unsure of how things work in your area, you can find regional business support here.

What about small business taxes?

As said above, you may not need to register your business. However, depending on the type of business, you may have to register for a GST/HST account.

If you make taxable sales, leases, or other supplies in Canada and you exceed $30,000 over four consecutive calendar quarters then you will be required to apply for a GST/HST account. Once you hit this point you will be required to charge GST/HST on your services or products to your clients. You will collect this tax and then pay it back to the government. The added benefit is that you can also claim the GST/HST on any goods or services that you use related to your businesses.

It is also possible to register for one before you hit this status if you choose to do so. Applying for a GST/HST account, even if you don’t need one yet, can be advantageous. This is especially true in the case of freelancers as it can add credibility and professionalism. 

You can register for a GST/HST account online, by mail or fax, or over the phone. Learn more here.