Anyone who’s joined OnlyFans and has started to earn an income has likely wondered how their taxes will work. To be clear, it doesn’t matter if you’ve earned $10 or $100,000 on the site, 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 the amount of taxes you owe. Here’s everything you need to know about filing your taxes as an OnlyFans performer.
Fill out a W-8BEN form
Canadian content creators should be getting 80% of their revenue from OnlyFans. The 20% that’s held is their fee.
Technically speaking, since OnlyFans pays from the United States, they’re legally obliged to withhold 30% of your income for tax purposes. However, as a Canadian, we have a tax treaty with the U.S., where you can earn income from the U.S. without paying taxes as long as you’re paying Canadian taxes on that income.
If OnlyFans is withholding any income for tax reasons, you need to fill out a W-8BEN and submit it. This will show them that you’re exempt from withholding taxes. The W-8BEN is only for individuals and sole proprietors. If you’re registered as a corporation, partnership, or another business entity, you’d have to submit a W-8BEN-E form.
Most Canadians won’t have a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN), so just worry about including your Social Insurance Number (SIN). Once completed, you won’t have any of your income withheld, so be sure to submit it as soon as you can.
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, internet, computer hardware etc. Even things such as lights, cameras, outfits, lube, and toys would be considered legitimate business expenses.
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 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.
Note that any money you lose due to currency conversion fees and the 20% OnlyFans takes as a cut can also be claimed as a business expense. For example, let’s say you earned US $10,000 in 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 and any currency fees you paid to convert it to Canadian dollars.
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.
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 are 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.
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).
Registering for a GST/HST number
As a Canadian freelancer, you’re required to register for a GST/HST number when you earn $30,000 of income in any given year. Once registered, you must charge any Canadian customers GST/HST.
Since OnlyFans is American, and the income comes from there (regardless of where the person who’s paying you is from), the tax is actually zero-rated. That means you wouldn’t charge them any GST/HST. To be clear, you still have to register for a GST/HST # when you earn $30,000 in freelance income. You just wouldn’t charge OnlyFans any taxes.
It may sound confusing, but basically, you don’t charge any entity tax if they’re not located in Canada. When you file your taxes, there’s a section for foreign income. That’s where you would list the money you made from OnlyFans.
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 one of the best business credit cards in Canada. 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 them, you’ll never get any paper statements. That said, you can obviously check all your transactions directly from the app.
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.
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 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.
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 you should save for taxes
In Canada, we have a marginal tax rate. The more money you earn, the more taxes 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.
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.
OnlyFans Taxes for Canadians is no different from freelance taxes for Canadians. In the eyes of the CRA, OnlyFans is just another form of employment. As long as you’re filing and paying your fair share of taxes, the CRA will not care. There’s no shame in what you do. You should be proud of the business you’ve built.