How to file taxes in the sharing economy

Why read this?

You are:

– unemployed or underemployed; or

– part of the sharing economy.

What to do

1. Report employment income

• Report your income on Line 101 of your return.
• If you earn tips, or cash for occasional jobs, report these on Line 104 of the return.
  • If you have income on Line 104, you’re eligible for the Canada Employment Amount on Line 363 of Schedule 1, Federal Tax.
    • Claim the lesser of: $1,127, or the total of the income reported on Lines 101 and 104.

2. Report employment insurance

• Report the amount from Box 14 of your T4E: Statement of Employment Insurance Benefits, minus any money in Box 18, on Line 119 of the return.

WARNING: If you have other sources of employment income, some of your EI benefits may be clawed back, says accountant Colleen Gibb, partner at Gibb Widdis in Ancaster, Ont.

3. Deduct interest paid on student loans

• You can claim interest paid on your student loan in the tax year, or the preceding five years if the loan was made under the Canada Student Loans Act, the Canada Student Financial Assistance Act, or a similar provincial or territorial program.

WARNING: Interest paid on a personal loan, line of credit, a student loan that’s combined with another loan, or a foreign student loan, is not deductible.

TIP: If you don’t have any tax payable for the year, hold off on claiming the interest until future years, says CRA.

• Enter the interest paid on Line 319 of Schedule 1.
• Claim the equivalent provincial or territorial tax credit on Line 5852 of the provincial form.
• If filing a paper return, attach supporting documents showing the interest amounts paid.

4. Report sharing economy income

• Income from online businesses must be included in your income.

You operate an online store

• Report income on Form T2125: Statement of Business or Professional Activities.
  • Under Internet Business Activities, list the site’s URL.
  • In Part 1, calculate GST/HST if you have more than $30,000 in revenue, or have a GST/HST account.
  • In Part 3, calculate gross income, and enter the total on Line 8299 of Form T2125 on Line 162 of the return.
  • In Part 4, subtract inventory and other costs from gross income.
  • In Part 5, deduct business expenses.
  • If you run a business out of your home, calculate related expenses in Part 8 and enter the total in Part 6.
  • Enter the total from Line 9946 of Part 6 on Line 135 of the return.

You list your house on a home-sharing service

• Determine whether your income is considered business or property income under CRA rules.

a. If you only provide space and basic services, such as utilities, laundry facilities or parking, then CRA considers it to be property income.

• Complete Form T776: Statement of Real Estate Rentals to calculate income and expenses.
• List your gross income, from Line 8299 of T776, on Line 160 of the return.
• List your net income, from Line 9946 of T776, on Line 126 of the return.

b. If you provide additional services, such as cleaning or meals to renters, then CRA says the income is from a business.

• Follow the procedures for income from an online store, above.

Sources: Colleen Gibb, FCPA, FCA, Partner, Gibb Widdis, Ancaster, Ont.; CRA