Have you wondered how OnlyFans taxes for Canadians work? If you’ve joined OnlyFans as a performer and have started to earn an income, you’ll need to pay your fair share of income tax. To be clear, it doesn’t matter if you’ve earned $10 or $100,000 on the platform, any income earned is considered self-employment income and needs to be reported to the Canada Revenue Agency. Also, the CRA does not care what your profession is. They just want you to pay your taxes.
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.
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
- 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.
- 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.
- 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)
- With a corporate return, you should also have an accountant T2 (corporate tax return is much more complicated than a T1(personal tax return)
- 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)
- You must contact Fenix international to let them know you have incorporated and they will ask you for your certificate and articles of incorporation.
- 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%
- 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.
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.