What You Need to Know
The sharing economy, also known as collaborative consumption or peer-to-peer-based sharing, has exploded over the last few years. It is a concept that highlights the ability — and perhaps the preference — of individuals to rent or borrow goods rather than buy and own them.
Not surprisingly, people want a piece of this. And so does the taxman — whether you are driving for Uber or renting out your house on the weekends.
Businesses in the sharing economy, like Uber, Lyft and Airbnb, connect individuals or businesses that are looking for a particular product or service to those that have it. Sharing economy arrangements are generally booked using online platforms through a third party, using a website or a software application.
Do you earn income from the sharing economy?
The sharing economy can take a variety of forms, such as:
- accommodation sharing: renting out homes, rooms, cottages
- transportation: ride-sharing, rentals of bikes, boats
- space rentals: gardens, desks, workspaces, laboratories
- making and selling goods: household goods, jewelry, beauty products, food, meals
- providing services: esthetics services, animal care, freelance professional expertise
TAX TIP Remember that you must meet your GST/HST goods and services tax/harmonized sales tax reporting and remittance requirements, if applicable. Failure to do so may result in serious consequences such as fines, penalties, or even jail time, in addition to paying the taxes owing on unreported amounts. In order to properly register and get your tax filing obligations up to date, and to avoid costly penalties and jail time, please contact us now for professional assistance.
What are your tax obligations?
- If you earn any income through the sharing economy, it is subject to the same taxation and GST/HST rules that apply to income earned from a property or business.
- All income earned through the sharing economy must be reported on your tax return.
- Taxpayers who earn more than $30,000 through the sharing economy need to register for a GST/HST account.
- Regardless of whether you earn more than $30,000 annually, if you are earning money from ride-sharing platforms like Uber and Lyft, then you must register for a GST/HST account.
TAX TIP Whether people are renting their home or driving for Uber, they must think of their sharing venture as a business. For example, with Airbnb, home owners would claim any money as rental income, not business revenues, though it is taxed at the same rate as regular income. That said, they would indeed be eligible to deduct various expenses. A Profit and Loss or Income Statement must be prepared every year and submitted to Canada Revenue Agency. If you know somebody who may need our professional assistance, please contact us now.
June 17, 2019 Self-Employed Tax Deadline
If self-employed, you only have 15 days left to save on your 2018 personal income tax so contact us now to arrange your free, no-obligation, strictly confidential FinancialCHECKUP™.
Be sure to file your 2018 self-employed personal income tax return on time to avoid costly late filing penalties.
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HALPERN Chartered Professional Accounting Firm is a full-service Tax, Accounting, Business Advisory and Financial Planning CPA firm. Accurate and timely information is only one piece of any effective solution. We are dedicated to bringing you all of the pieces together – knowledgeable and innovative advice, leading-edge technology, and a strong relationship with our clients. This type of creative thinking enables us to help you and your business organization to solve complex problems and significantly enhance your ability to improve performance, manage risk and build value.
To arrange your personal and confidential FinancialCHECKUP™, call now 905-709-HELP or click here.