Continuous advancements and innovative changes in digital technologies have given rise to unconventional ways to generate income in recent years. This paradigm shift has introduced new lucrative income streams available to a breed of professionals known as "influencers". These may include Twitch or YouTube streamers earning advertisement revenue, performers receiving subscriptions, gifts, and donations through OnlyFans, as well as Instagram or TikTok content creators receiving funding through commissions, sponsorships, brand partnerships and perks. Regardless of the platform chosen, influencers are obligated to diligently report their earnings to the Canada Revenue Agency (CRA) and fulfill their tax obligations.

What is Considered as Taxable Income?

Influencers earn taxable income through a variety of means, namely:

  • subscriptions to their content and social media channels;
  • advertising for other businesses;
  • collaboration, partnerships, and sponsorships with other influencers/businesses;
  • partnerships with other brands/influencers/businesses;
  • tips & gifts from followers and social media audiences;
  • brand trips and sponsors; and
  • referral codes for merchandise/goods promotion.

If you are a Canadian resident engaging in influencer activities, you must report all such income (monetary and non-monetary) earned inside and outside of Canada. You must report and pay tax on all income earned from the respective social media platform as self-employment income by completing Line 26000 of your income tax and benefit return and Form T2125, Statement of Business or Professional Activities.

Influencers who are not Canadian residents 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.

Claiming Expenses

If you qualify as a business, you have the opportunity to deduct reasonable and directly related business expenses from your earnings, thereby significantly reducing your taxable income. Eligible expenses include, but are not limited to:

  • Car-related expenses (payments, gas, mileage, parking)
  • Business travel expenses (accommodations, food) for events
  • Digital advertising costs
  • Subscriptions to trade-specific publications

However, certain capital expenses, such as computer equipment, smartphones, software, and camera equipment, cannot be written off as deductions. As with any other business, if you are claiming expenses in your tax returns, you are required to maintain receipts for at least six years in the event of an audit by the CRA.

GST/HST Implications

There are also GST/HST implications for social media influencers if the income derived from their taxable source exceeds $30,000 over four calendar quarters. In such instances, influencers are required to register for a GST/HST business account with the CRA. Once registered, influencers are obligated to collect and remit the related GST/HST to the CRA.

If the influencer already has a GST/HST account, they may be eligible to claim Input Tax Credits (ITCs) for the GST/HST paid on purchases and expenses related to their commercial activities. However, ITC claims are contingent upon GST/HST being payable on business activities. In other words, if you have no income, you cannot claim ITCs.

Conclusion

By accurately reporting income, claiming eligible expenses, and adhering to GST/HST requirements, influencers can ensure compliance with CRA regulations while optimizing their tax position. Given the complexity of Canadian tax laws and individual circumstances, with the right support and guidance from our tax lawyers, influencers can confidently manage their tax affairs and focus on what they do best: creating engaging content and building their online presence.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.