Gig economy

On this page

• Understanding the gig economy
• Income tax obligations
• GST/HST obligations
• Keep records of all your transactions

Understanding the gig economy

The gig economy generally refers to services provided through short-term contracts, freelance work, or other temporary work that is arranged through an online platform or mobile application.

In the gig economy, gig workers operate as independent contractors and freelancers. Common platforms used in the gig economy may include, but are not limited to:

• Fiverr
• Clickworker
• Crowdsource
• Uber Eats
• Skip the Dishes

Contracted services can range from a micro-task (a small task set up through the Internet) to specialized services. Contracted services can include tasks such as:

• web development
• business consulting services
• maintenance and repairs for residential or commercial property
• legal consulting services
• graphic design services
• moving services
• writing and translation services

Depending on the gig, workers may do the work from remote locations. Online platforms and mobile applications can connect consumers and businesses with gig workers from all over the world.

Income tax obligations

Gig workers who are resident in Canada must report and pay tax on all self-employment income by completing line 26000 of their income tax and benefit return, as well as Form T2125, Statement of Business or Professional Activities.

• Line 26000 – Taxable income
• Form T2125, Statement of Business or Professional Activities
• How to fill in Form T2125

This applies to all income, including income earned from business done outside of Canada.

Gig workers who are not resident in Canada are subject to Canadian income tax on most Canadian-sourced income paid or credited to them during the year unless all or part of that income is exempt under a tax treaty. More information on non-residents is available at Non-Residents and Income Tax - Canada.ca.

Tax obligations on foreign income

Taxes paid on foreign income by Canadian residents could be eligible for a tax credit.

• Line 40500, Federal foreign tax credit
• Form T2209, Federal Foreign Tax Credits

If you paid income tax to more than one country and the total foreign income taxes paid to all countries was more than $200, a separate calculation is required for each country for which you claim a foreign tax credit.

Claiming expenses

You can claim eligible expenses associated with income you earned through the gig economy.

To claim expenses, you have to keep proper financial records.

Examples of eligible expenses include:

• costs from using a platform to sell services
• marketing costs to increase traffic to your website or online portfolio, if those costs are associated with earned income
• cost of materials or services within or outside of Canada, such as:
  • raw products (wood, wool, paint, beads)
  • software licences
  • editing or translation services

For more information on what qualifies as an eligible business expense on your income tax and benefit return, see Business expenses.

GST/HST obligations

Generally, if you earn more than $30,000 over four calendar quarters by supplying taxable goods or services, you have to register for, collect, and remit (send) the related goods and services tax / harmonized sales tax (GST/HST) to the Canada Revenue Agency.

The requirement to register for, collect, and send GST/HST for your sales and services depends on:

• the type of work you are providing
• the location of the person or business you are providing the service to

You may choose to register for and collect the GST/HST even if you earn less than $30,000. This lets you take advantage of the related input tax credits (ITCs). These credits are prorated in the same way as expenses that are deducted for income tax. For information, see “Find out if you are eligible to claims ITCs” on Input Tax Credits.

If you have taxable sales from both ridesharing services and gig economy contracts, and the total is less than $30,000 over four calendar quarters, you have to register for, collect and remit GST/HST only on the ridesharing services. However, you may choose to also collect and remit GST/HST on your gig economy contracts. If the total taxable sales are more than $30,000 over four calendar quarters, you must collect and remit (send) the GST/HST to the CRA on both services.

GST/HST information

When to register for and start charging GST/HST

General Information for GST/HST Registrants

Already registered for GST/HST?

If you are registered for the GST/HST, you may be eligible to claim Input tax credits for the GST/HST paid on purchases and expenses related to your commercial activities.

Generally, you can claim an input tax credit (ITCs) only when you have paid GST/HST (or it is payable) on expenses for your business activities. A tax professional can advise you on your tax obligations.

• Input tax credits (ITCs)
• Calculate input tax credits – ITC eligibility percentage

Keep records of all your transactions

Keep track of your income and your expenses, including sales you make to buyers in Canada and other countries.

• Business records
• Keeping records

Depending on the extent of your participation in the platform economy, additional tax considerations may apply. For more information, refer to General Information for GST/HST Registrants - Canada.ca.