Compliance in the platform economy

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Platform economy

The platform economy includes economic and social activities facilitated by the use of technologies such as the Internet and mobile applications. A mobile application, commonly referred to as an app, is a type of software designed to run on a mobile device, such as a smartphone or tablet computer.

Platforms connect buyers and consumers with sellers and service providers. Within the platform economy, the Canada Revenue Agency (CRA) has identified four types of businesses:

  1. Sharing economy: Using personal assets to earn revenue (for example, Airbnb, CanadaStays, Uber, Lyft)
  2. Gig economy: Short-term or short contract-based work (for example, Clickworker, Crowdsource, Fiverr)
  3. Peer-to-peer (P2P): Selling of goods and services from one person directly to another (for example, Etsy, eBay, Amazon, Kijiji)
  4. Social media (or social influencers): Income earned through the use of social media platforms via advertisement revenue, subscriptions, product placement, product promotion (for example, YouTube, Instagram, Twitch, Facebook, Twitter)

Understanding your tax obligations

There are many platforms that taxpayers can use to generate income. The ones listed above are examples, but there are a lot more that are not listed here. If you use any platform, be aware of your obligations for income tax, as well as for goods and services tax / harmonized sales tax (GST/HST).

Income tax implications

If you participate in the platform economy, you are likely considered to be self-employed and carrying on a business, in which case your tax obligations are different from those of an employee.

If you are self-employed, you have to do the following five things:

  • Report and pay tax on income earned from taxable activities, including income earned from platforms, when filing your income tax and benefit return. A tax professional can advise you on how to file your return. Tax is not withheld from your earnings as a self-employed individual. If at the end of the year your tax payable is above a certain threshold, the CRA will ask you to make tax payments at regular times in your future tax filing year(s). For more information go to Paying your income tax by instalments.
  • File Form T2125, Statement of Business or Professional Activities, to report your self-employment income. For information on how to complete Form T2125, go to How to fill in Form T2125, Form T2042, or Form T2121.
  • Contribute to the Canada Pension Plan (CPP). Every person (with some rare exceptions) over the age of 18 who works in Canada, excluding Quebec, and earns more than $3,500 per year must contribute to the CPP.
  • As a self-employed individual, when filing your income tax and benefit return, you are responsible to pay the employer and employee parts of CPP contributions. You do this using the return’s Schedule 8, CPP Contributions on Self-Employment and Other Earnings.
  • If you are a resident of Quebec, you are responsible to pay Quebec Pension Plan (QPP) contributions. For more information go to You are a self-employed worker (Retraite Quebec).
  • Keep records of all your transactions so that you can support income earned and expenses incurred. For more information on which types of records must be kept, go to Business records.
  • Report taxable income from all sources. Income is net earnings from employment, self-employment (including most platform economy activities), investments or benefits. Reporting all of your taxable income helps you by:
    • increasing your contribution limits for registered retirement savings plans
    • increasing your potential maximum amount for a mortgage or loan

Expenses

You can claim eligible expenses on your income tax and benefit return. To determine your expenses, you need to keep records of:

  • how much money you made
  • details about when, how, and where you made your money
  • details about expenses you incurred in making the money. For example, you may be able to claim a percentage of your gas expenses if you used your personal car to earn money by providing ridesharing services.

GST/HST implications

The following table explains when you should register for a GST/HST account.

The following table explains when you should register for a GST/HST account.
If Then What you need to do
You do not exceed the $30,000 threshold over four consecutive calendar quarters. You are a small supplier. You do not have to register. You may choose to register voluntarily if you make taxable sales, leases, or other supplies in Canada. Your effective date of registration is usually the day you ask for your GST/HST account (or up to 30 days before that day).
You exceed the $30,000 threshold in one calendar quarter. You are no longer a small supplier, and you have to charge GST/HST on the supply that made you exceed $30,000 within the calendar quarter and all taxable supplies thereafter. For more information about calculating the small supplier threshold, go to When to register for and start charging the GST/HST. You must register.
Your effective date of registration is no later than the date of the supply that made you exceed $30,000.
You have to start charging GST/HST on the supply that made you exceed $30,000.
You exceed the $30,000 threshold over the previous four or fewer consecutive calendar quarters (but not in a one calendar quarter). You are no longer a small supplier at the end of the month following the quarter in which you exceed $30,000. You have to register. Your effective date of registration is no later than the beginning of the month after you are no longer a small supplier.
You have to start charging GST/HST on your taxable supplies as of your effective date of registration.

Small supplier

If you are a small supplier who earns less than $30,000 of gross revenue from worldwide taxable sales, you may voluntarily register to take advantage of the related input tax credits (prorated in the same way as the expenses that are deducted for income tax purposes). If you are already registered for GST/HST, you have to collect and remit (pay) GST/HST to the CRA even if your gross revenue on taxable sales is not more than $30,000.

If you are earning money from ridesharing, you have to register for GST/HST regardless of whether you earn more than $30,000 annually from your ridesharing activities. See ridesharing to review the GST/HST requirements, because the rules changed as of July 1, 2017.

After GST/HST registration

After you are registered for GST/HST, you will need to:

  • charge GST/HST when providing a taxable service or product (including those provided through platforms)
  • keep track of the expenses you incurred in providing a service or product and the GST/HST you paid on those expenses
  • file a GST/HST return and remit (pay) the GST/HST that you collected to the CRA

For more information on GST/HST registration, go to Register for a GST/HST account.

For more information about your tax obligations, go to Checklist for new small businesses.

If you live in Quebec, your reporting requirements may be different, because you need to report to the CRA and Revenu Québec. For more information about your tax obligations, go to General Information – Individuals (Revenu Québec).

Sharing economy

The sharing economy connects individuals and businesses that are looking for a product or service to those that offer it. Arrangements are generally booked using online platforms through a third party, or using a website or a software application. The sharing economy includes everyone who registers with the third party, from individuals looking to earn a bit of money performing a task a few hours a week, to businesses looking to tap into the market of consumers shopping on the platform.

The sharing economy can take a variety of forms, such as:

  • accommodation sharing: renting out homes, rooms, cottages
  • transportation: ridesharing, rentals of bikes, boats, food deliveries
  • space rentals: gardens, desks, workspaces, laboratories

Ridesharing

Ridesharing is an arrangement in which a passenger travels in a private vehicle, usually for a fee, and arranged by means of a website or a mobile application (app).

Definition of a taxi business

Effective July 1, 2017, the definition of a taxi business for GST/HST purposes was changed to include anyone who provides ridesharing services. A taxi business includes any transportation of passengers for a fare, and arranged or coordinated through an electronic platform or system.

For the rules on transportation services that fall under the CRA definition of a taxi business, go to GST/HST information for taxi operators and commercial ridesharing drivers.

Tax obligations

Regardless of how much time you spend driving your vehicle for fares, you are considered to be a taxi in Canada. You must:

As an owner/driver participating in the ridesharing industry, you may be relying on an application or website to collect your fares. It is your responsibility to make sure that either you collect and remit (pay) the related GST/HST to the CRA or that the GST/HST is collected and sent to the CRA on your behalf. You can use the GST/HST calculator (and rates) to help you calculate the GST/HST you have to collect and remit (pay) to the CRA.

Amounts withheld or deducted by a platform may be expenses that you are entitled to deduct from your income when calculating your tax payable. The GST/HST paid on such expenses may also qualify for an input tax credit. Individual situations may vary. Understand your ridesharing agreement, and keep a copy of it in your records.

If the combination of income from ridesharing services and other taxable sales is more than $30,000, you must collect and remit (pay) GST/HST to the CRA on all of your sales (not only on the income from ridesharing services).

For more information on your GST/HST obligations, go to GST/HST and Commercial Ridesharing Services.

Accommodation sharing

Accommodation sharing is renting part or all of a property for a short period. It can include your primary or secondary residence. It also includes any rentals facilitated by a third party, a website, or an application.

Income tax implications

All money you receive from an accommodation sharing arrangement is subject to income tax. Also, your income from accommodation sharing may be considered as rental income from a property or a business.

To determine the type of income you earned, consider the number and types of services you provide for your tenants. In most cases, you are earning income from property if you rent space and only provide basic services. Basic services include heat, light, parking, and laundry facilities. If you provide additional services to tenants, such as cleaning, security, and meals, you may be carrying on a business. The more services you provide, the greater the chance that your rental operation is a business.

Rental income you receive from renting a property or from accommodation sharing has to be reported on your income tax and benefit return, and you have to file Form T776, Statement of Real Estate Rentals. For help on filing a statement of rental income and expenses, go to Completing Form T776, Statement of Real Estate Rentals.

For your rental income from a business, you must report the income you receive from renting a property or accommodation sharing on your income tax and benefit return, and you have to file Form T2125, Statement of Business or Professional Activities. For information on how to complete that form, go to How to fill in Form T2125, Form T2042, or Form T2121.

When you change the use of a property or part of a property (for example, from using it personally to renting it out or vice versa), there may be tax implications. For more information, see Changes in use.

Depending on the facts of a situation, tax implications can vary.

Quebec residents

If you live in Quebec, you may want to consult Revenu Québec’s brochure on Individuals and Rental Income for information on the tax treatment of income and expenses related to rental income.

How to deduct rental expenses

Generally, you can deduct any reasonable expenses you incur to earn rental income. However, when you rent only part of a building, such as a room in your house, you can claim only the expenses that relate to the rented part of the building.

To calculate the part you can deduct, use a reasonable basis, such as the area of the available rental space divided by the total area of your home. Taking this amount, multiply it by the percentage of time the space has been rented in a year, then by the total amount of each expense you are claiming.

Example

If your annual electricity bill for your entire home is $1,000 and you rent out a room in your home for three months, you cannot deduct the full $1,000 as an expense. If the area being rented makes up 10% of the area of your home and the room was rented for three months, then the allowable expense would be $25 (10% x 3/12 x $1,000 = $25).

We recommend that you keep detailed records of all rental income you earn and any expenses you incur to earn that income, because the CRA may ask to see them.

For more information, go to Expenses you can deduct.

Goods and services tax / harmonized sales tax (GST/HST) implications

Accommodation sharing falls under short-term accommodation, defined as a rental where the period of continuous occupancy is less than one month. Rentals of residential premises for periods of continuous occupancy of one month or more are exempt from GST/HST.

If you are a small supplier who earns less than $30,000 of gross revenue from accommodation sharing, you may voluntarily register to take advantage of the related input tax credits (prorated in the same way as the expenses that are deducted for income tax purposes).

Notes

If you are registered for GST/HST, you have to collect and remit (pay) that tax to the CRA on your short-term accommodation revenues, even if they are not more than $30,000.

If you have income from both accommodation and ridesharing services, and it is not more than $30,000, you only have to collect GST/HST on the ridesharing income.

For more information on GST/HST registration, go to Registering for a GST/HST account.

Revenu Québec administers GST and Quebec sales tax in the Province of Quebec. For more information about GST and QST registration, go to Registering for the GST and QST. If your establishment is located in Quebec, you may also have to register for the tax on lodging. For more information, go to Registering for the Tax on Lodging.

Gig Economy

If you earn income through the gig economy, you need to know the tax obligations that apply to you.

“Gig economy” usually refers to services provided through short-term contracts or freelance work, as opposed to permanent jobs. In a gig economy, companies tend to hire independent contractors and freelancers, often through online platforms or apps. These workers are typically considered to be self-employed instead of employees.

The contracted services can range from a micro-task (a small task set up through the Internet) to specialized services. They can include anything from moving services and home repairs to graphic design, writing and translation or consulting and legal services. In addition, in the gig economy, work may be carried out anywhere, as online platforms can connect businesses and independent contractors from all over the world.

Note

The gig economy, which is based on services, is different from the sharing economy, where income is earned from underused assets such as a room in a home, a vehicle, machinery or equipment.

Income tax obligations

As a resident of Canada, you are required to report your income from all sources on your T1 income tax and benefit return and Form T2125, Statement of Business and Professional Activities. This applies to all your income, including any income you earn from businesses conducted outside of Canada. If you are incorporated, report your income by completing the T2 corporation income tax return and including Schedule 125 Income Statement Information.

If you paid taxes on foreign income, you could be eligible for a tax credit. Individuals claiming this credit should use Form T2209, Federal Foreign Tax Credits. (As noted on the form, if the total foreign taxes you paid to all countries where you earned income are more than $200, you need to do a separate calculation for each country.) Corporations claiming this credit must complete Schedule 21, T2SCH21 Federal and Provincial or Territorial Foreign Income Tax Credits and Federal Logging Tax Credit. For more information, see Income Tax Folio S5-F2-C1, Foreign Tax Credit.

You can claim eligible expenses relating to income you earned through the gig economy. To claim expenses, you must maintain proper financial records, including:

  • a list of all money earned from gig work
  • details about when, how and where you made this money
  • details of the expenses you incurred to earn this money, supported by invoices, receipts, or vouchers (examples of expenses include the business portion of your Internet or cell phone bill, business-use-of-home expenses, new hardware, or software required to complete a task)

For information about your responsibilities associated with keeping records, go to canada.ca/taxes-records.

GST/HST obligations

You may be required to collect and remit (pay) GST/HST on your sales and services. This depends on the location of the business you are completing work for, as well as the type of work you are providing. As a resident of Canada, you must register for the GST/HST if your revenue from taxable supplies (including zero-rated supplies) of goods and services, made inside and outside Canada by you and your associates, is more than $30,000 in a calendar quarter or over the last four consecutive calendar quarters.

For information on when you must register for GST/HST, please see When to register and start charging GST/HST. For more information on your GST/HST reporting requirements, go to General Guide for GST/HST Registrants.

If you are a GST/HST registrant, you may be eligible to claim the GST/HST paid on purchases and expenses related to your commercial activities as an input tax credit (ITC). For more information, see Calculate input tax credits – ITC eligibility percentage.

A tax professional can advise you on your tax obligations.

Peer-to-peer (P2P)

If you sell goods or services on a peer-to-peer (P2P) digital or online platform, you need to know the tax obligations that apply to you.

Peer-to-peer selling typically involves selling goods or services from one person directly to another. It includes situations where the seller and buyer connect through online platforms like websites, online marketplaces and mobile applications.

Income tax obligations

As a resident of Canada who earns income from peer-to-peer (P2P) transactions, you are required to report your income from all sources inside and outside of Canada on your T1 income tax and benefit return and complete Form T2125, Statement of Business and Professional Activities. If you are incorporated, report your income from all sources inside and outside of Canada using the T2 corporation income tax return and complete Schedule T2SCH125, Income Statement Information.

If you paid taxes on foreign income, you could be eligible for a tax credit. Individuals claiming this credit should use Form T2209, Federal Foreign Tax Credits. (As noted on the form, if the total foreign taxes you paid to all countries where you earned income are more than $200, you need to do a separate calculation for each country.) Corporations claiming this credit must complete Schedule 21, T2SCH21 Federal and Provincial or Territorial Foreign Income Tax Credits and Federal Logging Tax Credit. For more information, see Income Tax Folio S5-F2-C1, Foreign Tax Credit.

It is important to maintain proper financial records of all your sales and expenses. This applies to sales you make to buyers in Canada and other countries.

Keep records of all your purchases as you can claim eligible expenses on your tax return. For example, expenses incurred for using a platform to sell your products or to direct potential customers to your online store or website could be considered eligible expenses because these are incurred for the purposes of making income. Eligible expenses could also include costs incurred for the purchase of materials or services inside or outside of Canada (for example, raw products like paints, wool, beads or wood; services such as editing or translation; software licenses, and more).

For information about your responsibilities associated with keeping records, go to Keeping records.

GST/HST obligations

As a resident of Canada, you must register for GST/HST if your revenue from taxable supplies (including zero-rated supplies) of goods and services, made inside and outside Canada by you and your associates, is more than $30,000 in a calendar quarter or over the last four consecutive calendar quarters.

For information on when you must register for GST/HST, go to When to register and start charging GST/HST. For information on your GST/HST reporting requirements, go to General Guide for GST/HST Registrants.

If you are a GST/HST registrant, you may be eligible to claim input tax credits (ITCs) on purchases made in relation to your commercial activities. You can claim an ITC only when you have paid the GST/HST (or it is payable) for your business activities. For more information, see Calculate input tax credits – ITC eligibility percentage.

A tax professional can advise you on your tax obligations.

Social media influencers

Social media influencers are individuals who have built a reputation based on usage of a platform, as well as their expertise and knowledge about a topic. They make regular posts about that topic through their social media channels (such as YouTube, Instagram, Twitch, Facebook, Twitter, a blog) and attract a number of followers who use the same platforms and pay close attention to the influencers’ content. Influencers can motivate their followers to buy products or services through the influencers’ promotions and recommendations on their social media channel(s).

  • Example of travel blogger

    Scenario

    Kate, a 29 year old travel enthusiast, has always enjoyed travelling all over the world and sharing her experiences with her friends and family. A few years ago, she began posting various travel information on her social media accounts (Instagram, Pinterest, and YouTube to name just a few). She posted pictures of her travel destinations, information on accommodations, things to do and other unique features that visitors are typically interested in.

    When her online profiles became more popular with a growing number of followers, Kate started making money. For example, she often received money for sponsored posts and videos where she promoted different brands. As she continued to develop her travel content through blogs, photos and videos, Kate also regularly received free products and services for which she posted reviews. After reaching out to travel companies in preparation for a trip to South America, Kate was offered a free all-inclusive vacation valued at $5,000. A few months ago, a fashion clothing company agreed to pay her 10% of any sales made after she promoted them on her online accounts.

    Income tax implications

    Kate must include on her income tax return all income she receives from commercial activities, which includes her online operations:

    • All monetary benefits, including the money from her posts, pictures, and videos, as well as the commissions from the clothing company, and
    • All non-monetary benefits, including the free vacation valued at $5,000.

    GST/HST implications

    If there is a reasonable expectation of profit for Kate’s online activities and her total taxable supplies are more than $30,000 over 4 calendar quarters, she must register for, collect, and remit the GST/HST on all her taxable revenue from her online activities.

    Once registered, Kate may claim input tax credits for the GST/HST she pays on her business purchases for her online taxable activities.

    Kate can get more details on GST/HST registration requirements at Find out if you must register for a GST/HST account

  • Example of a video gamer

    Scenario

    Ted, a 21 year old online gamer, regularly plays football video games on streaming platforms like Twitch and YouTube. He regularly ranks among the top 30 players in North America. Although Ted became successful with online football very early after becoming a gamer, he quickly realized he needed to be better equipped to compete successfully. So he invested $4,000 in gaming-computer equipment and signed up for fibre-optic Internet. These expenses helped Ted improve his online gaming scores, which resulted in a significant increase in followers and subscriptions to his online channels.

    Ted makes good money from his game-streaming activities and fully expects to increase these activities and their revenues in the coming years:

    • Twitch pays Ted 50% of each channel subscription. In 2020, Ted received $4,000 from these subscriptions.
    • A specially-formatted link on Ted’s Twitch page directs his users to buy a beer mug in the shape of a football. Ted receives a percentage of these sales, which amounted to $1,500 in 2020.
    • When Ted competes on football video games, he often receives donations from his followers. For example, he made $1,000 from his share of the Bits (a virtual good) he received from Twitch in 2020 and $400 that his fans sent to his PayPal account.
    • In the fall of 2020, in recognition of Ted’s talent, an online gaming host operating out of Toronto offered Ted a contract. The terms of the contract offered various monetary prizes for players with the top scores. Realizing this was a good way to increase his exposure, Ted competed in a tournament, outperformed his competitors, and won the top prize of $50,000.
    • His exposure from this tournament led to a lot of interest from sporting companies. They purchased pictures of Ted from Twitch for their advertising campaigns. Twitch paid Ted $5,000 for the sale of these pictures to the sporting companies.
    • On his YouTube channel, Ted made money through ads that appear on his tutorial videos on how to play video games. He earned $1,100 in 2020 from these ads.
    • A prominent football equipment company gave Ted free sporting goods valued at $900 in recognition of his talent and skills.

    Income tax implications

    Ted has to report all the income he earns from commercial activities of his online streaming operations. On his 2020 income tax return, he must include:

    • $4,000 in subscription fees
    • $1,500 in commissions from beer mug sales
    • $1,000 in Bits from Twitch
    • $400 in donations transferred by his fans to his PayPal account
    • $50,000 from the football tournament
    • $5,000 for the sale of his pictures to sporting companies
    • $1,100 in ad revenues
    • $900 for the football equipment he received for free

    Ted can claim expenses to generate revenue from his online activities, such as:

    • capital cost allowance (depreciation) on the $4,000 computer equipment, and
    • the non-personal portion of the cost of the fibre-optic Internet connection from his Internet service provider.

    GST/HST implications

    If there is a reasonable expectation of profit from Ted’s online activities and his taxable sales are more than $30,000 in 4 calendar quarters, Ted must register for, charge, and remit to the CRA the GST/HST on his taxable sales.

    Once registered, Ted can claim input tax credits equal to the GST/HST he paid on the purchases he made that relate to his taxable sales.

    Ted can get more details on GST/HST registration requirements at Find out if you must register for a GST/HST account.

Income tax implications

If your social media channel is a source of income for you, the Canada Revenue Agency (CRA) considers it a business activity. As such, you must report all income (both monetary and non-monetary) that you earn through social media channels on either your income tax and benefit return or your T2 corporation income tax return.

You can earn income through several means, both monetary and non-monetary, including but not limited to:

  • subscriptions to your channel(s)
  • advertising (clickbait and brand advertisements)
  • sponsorships
  • calls to action
  • merchandise sales
  • tips
  • gifts
  • donations
  • trips
  • referral codes

Business expenses

Since the income you make from social media is considered business income, you can deduct business expenses to reduce your tax owing. The expenses you claim must be reasonable and directly related to your income as an influencer. You must report these expenses on either your income tax and benefit return, along with a completed Form T2125, Statement of Business or Professional Activities, or on your T2 corporation income tax return. To learn what qualifies as an eligible business expense on an income tax and benefit return, go to Business Expenses.

GST/HST implications

Generally, social media influencers whose taxable supplies are $30,000 or more must register for GST/HST. Several factors need to be considered to determine if you are required to register for, collect, and remit (pay) GST/HST to the CRA on taxable supplies generated through social media. For more information, go to General Information for GST/HST Registrants.

You may want to consult a tax preparer to make sure you understand your tax obligations.

How to correct your tax affairs

If you did not report your income from platform sales, you may have to pay penalties and interest. By correcting your tax affairs voluntarily, you can eliminate or reduce penalties and interest.

To correct your tax affairs (including corrections to GST/HST returns) and report income that you did not report in previous years, you can ask for a change to your income tax and benefit return, adjust a GST/HST return, or apply for a correction through the Voluntary Disclosures Program.

To qualify for the Voluntary Disclosures Program, your application has to meet the following conditions:

  • be voluntary, which means you apply before you are aware of the CRA taking any compliance action against you or anyone related to you
  • be complete, which means that you have included all relevant information and documents (including all returns, forms and schedules needed to correct the error or omission)
  • involve the application of a penalty (or interest for disclosures related to GST/HST)
  • include information that is at least one year beyond (for income tax) or one reporting period beyond (for GST/HST) the filing due date
  • include payment of the estimated tax owing

For more information

If you need more information, please call the CRA.

Individual tax enquiries line: 1-800-959-8281

Business enquiries line: 1-800-959-5525

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