Electronic income

How does income tax work for social media influencers? Here’s what you need to know

When it comes to tax season in Canada, things can get downright confusing. Luckily, the Canada Revenue Agency (CRA) makes it easy with a few tips, especially if you’re a social media influencer. Since many people earn income through countless online platforms, how does it work when filing your tax return?

The CRA states that “influencers who generate money and non-monetary income through social media may engage in business activities and earn business income”, so reporting any income is essential.

Influencers can earn income by posting photos, videos or other similar content on their social media channels with product placement or product promotion, CRA says.

The agency states that there are various ways, both monetary and non-monetary, for influencers to earn income from their social media activities, including:

  • Subscriptions to their channel(s).
  • Advertising (clickbait and brand advertisements).
  • Sponsorships.
  • Calls to action.
  • Sales of goods or commission on sales.
  • Advice.
  • Benefits such as products, clothing, travel or other gifts.
  • Referral Codes.

The CRA considers social media activity to be business-related when there is an element of profit involved. In this case, it is mandatory to declare your income and, when it comes to non-cash income, you must “use the fair market value of the item received”.

Social media influencers in Canada who earn more than $30,000 over four calendar quarters will be required to register, collect and pay the CRA a Goods and Services Tax, also known as Harmonized Sales Tax (GST). /HST) on all taxable income. of your online activity, says the CRA.

If your social media activities are considered business income, the CRA says you may be able to deduct qualifying business expenses to reduce the amount of tax owing on your income taxes.

For business expenses to be eligible for a tax deduction, the expenses must be directly related to your business activities as a social media influencer, must be reasonable and not personal in nature, and must be justified, states the BOW.

With platforms such as TikTok, Instagram and OnlyFans generating revenue for many, the Canada Revenue Agency says it’s important to report income from social media sales and activity to the CRA to avoid any penalties, including having to pay additional interest on undeclared income.

The cover image of this article was used for illustrative purposes only.