How to declare your income and expenses as a blogger (Canada)
It occurred to me as I was filling out my taxes this year that maybe people don’t know how to claim blog income (that is, if they don’t use an accountant).
It’s actually pretty simple but there are some rules you have to adhere to.
OBVIOUSLY YOU NEED TO DECLARE YOUR INCOME ON A T1 and a T21215
Any income is income and you need to declare it with a T1 General Tax Return (this is for all Canadians, bloggers or not).
You report your blogging AND personal income on the same tax form. You do not need two separate ones.
You also need to file a T2125 to state your business or professional activities.
Everything is kind of included in that neat little form above, so just read the guide and follow its rules.
If you have more than one business, you need to file SEPARATE T2125 forms.
(E.g. you teach piano and you blog, you need 2 separate forms.)
YOU ARE NAICS CODE: 711513
You need to put the NAICS code (North American Industry Classification System) as a blogger.
The code I have used is 711513:
711513 – Independent writers and authorsCAN
This Canadian industry comprises independent individuals (freelance) primarily engaged in creating artistic and cultural literary works, technical writing or copywriting. Independent print journalists are included.
Illustrative example(s)
- freelance journalist
- journalists, print, independent
- newspaper columnists, independent
- playwrights, independent
- reporters, independent
- song writers, independent
STARTING IN 2013 YOU NEED TO LIST THE WEBSITES
As of 2013 you need to list the websites you make your income from and what percentage. This obviously means you need to put your blog name.
Other income you need to declare:
- static advertisements you place on your site for other businesses
- affiliate programs
- advertising programs such as Google AdSense or Microsoft adCentre
- other types of traffic programs
Remember that even though eBay is a website where you sell items, it is not specifically linked to blogging so even if you just eBay things regularly, you need to claim that as income but on a separate T2125 from your blogging endeavours.
INCOME IS NOT JUST CASH — IT IS GOODS TOO!
Laura in the comments made an excellent point to mention that if you receive goods in return for blogging, you will need to claim it as income as well.
So if someone sends you a lipstick to review and you get to keep it, you need to claim that retail amount as income.
YOU ARE A “SOLE PROPRIETORSHIP”
You do not need to necessarily register a business name or pay any fees for business registration, you can use your own name (your personal one).
You can certainly register if you want to, but it isn’t required.
You are considered to be running a business if you REGULARLY make an income. If you just wrote ONE article for ONE site as a one-off thing, it’s not a regular income, much like if you sold a few pairs of shoes but you don’t do it regularly, it is not an income.
If you always write articles each month for a site, it is a regular income and you are a sole proprietorship / business in the CRA’s eyes.
YOU DO NOT NEED TO REGISTER FOR SALES TAX NUMBERS ONLY IF YOU MAKE UNDER $30,000 (GROSS)
You do not need to register for business sales taxes either if you make under $30,000 gross if you are a sole proprietorship over 4 consecutive calendar quarters (a year).
Generally for blogging as it is more of a service business than a product one (e.g. you are not making a physical product to sell it to someone) but that makes no difference because sales tax numbers deal with how much income you make which pushes you into the category of having to start collecting taxes on the government’s behalf.
If you make over $30,000 you need to register for GST / HST sales taxes and you need to start charging and collecting your clients GST / HST sales taxes on the government’s behalf, as well as remitting those sales taxes on a regular basis (every quarter) with a form.
It’s fairly simple, it really isn’t that complicated (collecting or remittance).
The good news of all of this is that you can also start claiming back GST / HST sales tax credits on any expenses for your business, like if you buy a pen or a computer and you paid GST / HST on it, you can also start to claim sales tax credits when you remit your GST / HST to the government so essentially, you do not pay sales taxes on what you buy.
(I do this for my business.)
You can also voluntarily register if you wanted to even if you make under $30,000 but you have to collect and file for sales taxes each quarter.
YOU PAY TAXES ON YOUR BLOGGING INCOME AS PART OF YOUR PERSONAL INCOME
This is not a separate business income but a personal income you’ve made.
If you want to separate your business from your personal income, you have to dive into a more complicated world of taxes and set up your business as a corporation.
The benefits of being a sole proprietorship is that your taxes are very easy to file.
The downside is that you are on the hook for anything you do under your sole proprietorship / business, like if someone sues you for instance.
Anyway, you are taxed at your personal tax rate, so keep that in mind if you also work a day job — it may bump you into the next tax bracket but that is not a bad thing.
YOU HAVE UNTIL JUNE 15TH TO FILE BUT HAVE TO PAY BY APRIL 30TH
You have until June 15th to file these taxes, but I prefer to do them sooner because if you owe money, you still have to pay by April 30th.
BE CAREFUL OF HOW MUCH YOU CAN CLAIM FOR EACH BUSINESS EXPENSES
A meal out with a fellow blogger?
Don’t think you can claim 100%.
You can only claim 50% of it because they assume the client ate 50% of the bill.
All the business expense categories for the Canada Revenue Agency are located here with all the rules on what you can and cannot claim.
This is what it looks like (when you go to fill out the T2125 form):
You will note that for meals, they put “allowable part only”, so don’t try and put in the full amount.
DO NOT ASSUME YOU KNOW WHAT GOES INTO EACH BUSINESS CATEGORY
Be sure to read each business expense category carefully to know where each expense should go, and do not assume anything.
I know it sounds counterintuitive and annoying but “Supplies” does not mean “Office Supplies”.
For example if you buy a laptop just for blogging, an ink cartridge, or even a chair to sit at your desk DO NOT assume that it goes under “Office Expenses” or “Supplies“.
A laptop in this case, is considered a capital expense and you can claim capital cost allowance (CCA) to account for its life span, or its depreciation each year (much like a car when you drive it off the lot.). Although for laptops I believe they’re in a special category now where it’s a 100% write off with no half-life (meaning you just write it all off).
In addition, each capital cost (a chair, table, laptop, car etc) has its own “CCA class” which comes with its own rules of what you can and cannot claim.
HELPFUL EXPENSES SPECIFIC TO BLOGGERS:
- If you receive income in USD, don’t forget to use the tax year’s average conversion rate given by the Bank of Canada to calculate the CAD equivalent (you should do this for all USD dividends, income etc and keep a copy of the screenshot or PDF of what rate you took for proof)
- The section for RENT is not where you put housing rent if that’s also where you live and work; this is commercial or outside office space rent. If you want to claim part of your actual rent as your home business space, you need to use the Business Use-of-Home section to calculate that (see below for more info)
- Web Hosting Fees and stock photo licenses goes under ADVERTISING
- Business cards, flyers and posters go under ADVERTISING
- OFFICE EXPENSES include stamps, printer paper, pens and so on, but NOT capital expenses furniture, calculators, laptops, or equipment those are capital expenditures. Office Expenses are things that are consumable (they disappear with use).
- Internet Service Provider (ISP) costs go under TELEPHONE AND UTILITIES but only the percentage you use for blogging (e.g. 50%)
- Your cellphone can also go under TELEPHONE AND UTILITIES but only the blogger-specific part of it, not 100%!
- Bank / Paypal Fees can also be written off (don’t forget to convert the USD to CAD), but only if you have a specific business-only account and it goes under MANAGEMENT AND ADMINISTRATION FEES
- If you go to a blogger conference, this goes under TRAVEL (Hotel, Car rental, Gas, Public Transit, even a daily allowance for food is included but you need to read the rules for this on the CRA website). You can also put any expenses such as taxis or public transit as part of your blogger expenses if you travel within your own town but only if it was for a blogger conference or something related to blogging.
- For meals, this goes under MEALS AND ENTERTAINMENT, but you can only claim 50% of this.
- OTHER EXPENSES can include CDs, DVDs anything you had to purchase for blogging but you need to specify this clearly
HELPFUL CAPITAL COST ALLOWANCE (CCA) CLASSES FOR BLOGGERS:
The category for Cellphones / Telephones is kind of hazy / up for debate, and could be either under Class 8 or Class 52 depending on how you use it.
- Cameras and Video Recording Equipment: Class 8 costing $500 or more otherwise it goes under Class 12
- Photocopiers, Printers, Fax Machines, and Telephones: Class 8
- Laptops: Class 52
- Furniture: Class 8
- CDs, Discs, Computer Software, Accounting Software (like TurboTax or UFile if you use either to do your taxes): Class 12 — but not for things like Microsoft Windows because it’s an “operating system” and not a computer software
- Microsoft Windows Operating System Computer Software: Class 52 (some say iPhones qualify under this rule because you use it to “monitor and handle data” but you can use your own discretion for this to put it under Class 52 or Class 8)
When in doubt, always call the CRA and check any of the above information, as tax classes and expenses can change from year to year based on what the CRA wants to do.
Also if any actual Canadian accountants spot discrepancies, do let me know in the comments and I’ll update accordingly; I only play an accountant on the blog.
😉
HOME OFFICE EXPENSES HAVE TO BE CALCULATED CAREFULLY
For things like home office expenses (internet, utilities, telephone), you can only claim the portion that you’ve actually used for your business.
So let’s say in a month you paid $50 for your internet connection. If 50% of the time you are using it to do blog-related stuff, you can claim 50% of the bill.
Or for utilities, you pay $100 a month for electricity, you can claim (based on your personal calculation) how much electricity is used for the whole month/year, and out of that amount, what portion can be attributed to blogging in your home office.
You need proof of all of this, by the way.
A way to measure this is to take the square footage of your home, find out how much square footage is attributed to your home office, and then apply that percentage to the bill, multiplied by what percentage of your home office use was just for blogging.
Then you also need to factor in the hours spent for personal versus business because obviously you are also using the internet / computer for personal use and not just for blogging.
An example:
1. CALCULATE THE SQUARE FOOTAGE OF YOUR HOME OFFICE FIRST
You have 500 square feet in your apartment.
Your home office is 50 square feet.
50 square feet / 500 square feet = 10% (your home office percentage of the household)
You pay $50 for electricity per month for personal and business use.
10% x $50 = $5
2. NOW CALCULATE HOW MANY HOURS SPENT IN THAT SQUARE FOOTAGE IS RELATED TO BLOGGING
Then if out of the 24 hours you spent 8 of them blogging (7 days a week!!!) then you need to multiply:
$5 x (8/24) = $1.66
So the formula is really:
10% x 33.33% x [Cost of Utility/ Heat etc]
If you do not blog 7 days a week and only blog Monday to Friday, or all Saturday and Sunday, adjust your hourly calculations to reflect that based on 24 hours a day, 7 days a week.
The final amount of 10% x 33% x $5 is how much you can put under electricity in your T2125 form, but you will need to subtract your Personal-use part of your “Home Office”, which in this case might account for 67% of that home office.
This is all recorded in dollar amounts and not percentages, so you will need to use Excel to calculate everything beforehand, and fill out the form correctly.
That section looks like this:
An example of how you’d fill out a T2125 form for business expenses is below:
Here’s how I would do this calculation:
| Business Use-of-Home Expenses | Total / Month | Total / Year | Home Office at 10% |
| Heat | $50.00 | $600.00 | $60.00 |
| Electricity | $50.00 | $600.00 | $60.00 |
| Insurance | $50.00 | $600.00 | $60.00 |
| Maintenance | $50.00 | $600.00 | $60.00 |
| Mortgage Interest | $300.00 | $3,600.00 | $360.00 |
| Property Taxes | $500.00 | $6,000.00 | $600.00 |
| Other Expenses: Water | $25.00 | $300.00 | $30.00 |
| Subtotal | $1,230.00 | ||
| Minus: Personal-use part (67%) | $824.10 | ||
| Subtotal of your Use-of-Home Claim (33%) | $405.90 | ||
Basically, I’d calculate out the total amounts I paid during the year, then take 10% of that, and input that as “business use-of-home”, and then out of THAT, calculate how much was actually used for blogging / personal use (33%).
Again, this is assuming you blog 8 hours a day, 7 days a week.
Adjust accordingly if 33% is far too high.
WHAT ABOUT IF I PAY RENT?
If you pay rent, you can deduct part of that rent instead which goes under MORTGAGE INTEREST.
OTHER EXPENSES are things like Water or household/home office costs, but not anything related to things like your telephone bill, cellphone bill or Internet because you do not need any of those bills to run an actual home unlike heat, electricity, water, etc.
Perhaps you can also put “Internet” under here (iffy), although I’d strongly suggest using the business expense categories above (TELEPHONE AND UTILITIES) to record that because that’s where it should go, as it’s not necessary to running a home.
DO NOT CLAIM ANY BUSINESS EXPENSES WITHOUT ANY ACTUAL BUSINESS CONDUCTED
Don’t go out to a meal with your friends and claim it as a business expense unless you legitimately discussed actual blogging business with them.
I know it sounds like common sense but… sometimes it isn’t for some folks, and they throw everything they eat underneath this category and think it’s okay.
STOP BLOGGING IF YOU DON’T MAKE A PROFIT AFTER A FEW YEARS (LIKE 3)
I know this sounds like common sense but generally speaking, tax folks can understand that starting a business means you lose money in the first few years of doing it.
However… if you are CONSISTENTLY losing money over a long period of time and you are STILL in business for yourself, this will raise red flags to the tax man and say: Hey.. why would someone stay in business if they’re always losing money? Wouldn’t they just fold?
They’re going to think you’re cheating them (and frankly you probably are if you are really losing money each year but you continue to “stay in business”).
DOCUMENT EVERYTHING
Scan or keep receipts of what you’ve paid for, and when so just in case they audit you, you’ll be kosher.
I like using Excel for this, and logging every single transaction with a short note to remind me of the date, and whom I met or what I did.
That’s it, my general guide on how to file taxes in Canada as a blogger if you are making a side income (even if it’s only $0.50!)
ANY OTHER TIPS/UPDATES/CHANGES FROM FELLOW BLOGGERS OR ACCOUNTANTS?
106 Comments
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Sherry of Save. Spend. Splurge.
Briefly – you should be talking to the CRA for this to be sure. Their hotline number is available and they are VERY VERY VERY nice.
In short, you would be claiming $700 as income, but $500 as expenses, and $200 is your net profit. It also depends on how you are structured as a company – incorporated, sole proprietorship, and not only that, if you make over a certain amount to have to also charge taxes.
I do believe on your personal income tax, if you are a sole proprietor, you have a line for something like Web or Internet Income as well. But again, this depends on your setup tax-wise how you claim it.
Any amount you receive in $USD should also be converted using the standard currency rate of the time, and claimed in $CAD (you will have to note the currency exchange used).
In short, this is not a simple answer. Call CRA and lay out the situation for them. They will tell you how to file it correctly based on your personal tax setup.
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Mallory
Great post, and super informative. I’ve been looking everywhere for information on the GST/PST concerning affiliate marketing, and the answers I’m getting are very mixed. I made over 30K last year, and the accountant I went to says I need to register. But as the income is commission-based and doesn’t involve the sale of any goods on my part, how does that work?
The companies themselves charge GST/PST on the products when they sell them; I don’t see any of that. Another question I have: Does the 30K have to be from a single company to charge that company GST on affiliate income? I am affiliated with approximately 30 different companies, will I need to invoice each of them and collect this? I plan to call Canada Revenue Agency on Monday to sort this out before registering, but I would love your input!
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Sherry of Save. Spend. Splurge.
You need to follow what your accountant is saying. I am not an accountant. I am only a small business owner.
As far as I recall: Any income over $30K – have to register for numbers. You need tax numbers to charge your clients added taxes. I charge services and I have to charge taxes (no goods).
If the companies charge YOU GST/PST, you can recover some of that via your ITC/ITR credits if you are incorporated. Again, ask your accountant.
30K does not have to be from a single company. Can be from a bunch. You need to invoice each of them.
Call CRA. This sounds tricky, maybe they have an easier way to invoice 30 of them at once or claim taxes. It also depends if you are incorporated or not (I am, and I recover the ITC/ITR credits or sales tax credits when I pay them).
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Chris
Hey, I have PR of the Canadian Government, but living in Demark since last year. I have an income stream from Adsense, and affiliate marketing. So, Am I eligible for a tax payer? or do you have more info regarding this?
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Sherry of Save. Spend. Splurge.
I think you should contact an accountant. Wherever you’re paying taxes, you should tell them you’re earning foreign (?) income.
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Vicky
This post is so helpful. Thank you so much!
I have a question, hope you could help me?
my husband and I are both BC residents, we fill tax together, and we all have incomes from employment. I recently registered a domain and started a blog, spend appox 20 hours a week on the blog now, paid everything from my own saving. I don’t expect seeing any income from the blog this year, but can I still fill tax deducible for all blog-related expenses (domain fee, website fee) when it comes to 2020 tax year?Thanks!
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jaskom
I’ve reached the point where I’m making over 30K but all my income is from an ad network in the US. Do I have to register for a GST number? I don’t charge GST to anyone, so do I have to get a number? And to get a GST number, do I have to have a business number? I’ve been sole proprietorship all this time….
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Sherry of Save. Spend. Splurge.
You should really contact an accountant or call the CRA to get clarifications as this is a specific question that might need more detail to decide if you have to do any of the above.
The $30K benchmark mentioned in the post is for corporations, when you incorporate and need to get sales tax numbers to provide to Canadian clients. As the ad network is American, I suspect you do not need these sales tax numbers.
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Pingback: Home Office Claim For Tax – Homepedia
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Karyl Sampson
I think lots of 0f things and has changed now.
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Ryan
Hi Sherry,
I really enjoyed this article as well as others on your site. I am starting my first blog (in a while), but I know that I will be creating more in the future. The blogs will utilize mainly affiliate commissions and ad revenue to start. Eventually, I’d like to offer some paid courses (ecomm).
My wife and I collect ODSP (disability), so that is our only source of income. I have a couple of questions.
I need to open a business bank account (an ODSP requirement), and the one I am looking at requires I have a business license to do so. I will be operating as a sole proprietor to start.
Can I create a single business name and file as a sole proprietor and operate all my blogs and ecomm sales under the one name?
If not, do I need a license for each site independently?
If so, how would taxes work for that? Would I claim total income and total expenses across all sites? Would I have to list each website with separate income and expenses?
I really appreciate any information you can provide to me on this. It all seems so complicated.
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Sherry of Save. Spend. Splurge.
I do not have details on the specifics of ODSP but from my years of business-running:
1. yes you can run all of the blogs and e-commerce sales under one single business name as a sole proprietor. Remember that whatever name you choose unless you register it and make sure that no one else has it, is not yours to freely use unless it is literally your name like “Sherry”, in my case.
The income from all these lines of business would be considered personal income and may or may not affect your ODSP income, just as an FYI. If it raises it, I do not know if you will lose ODSP income or not — something to research into.
2. Each site does not need a license — not sure what license you are referring to but read #1 and get back to me if you have more questions.
3. You have to list each business under each website and have the correct code for each (see the article where I said what the code is for the business of blogging).
You don’t need to list all of the separate incomes if you’re using one business name / form to report the info (easiest), but if you have several names you want to separate you need to fill out a separate form for each line of business.
Your sole proprietorship is basically you using your name and running a small business or a few of them.
The only thing is to not use a name that is registered by an incorporated business. The only safe name to use, is basically your own. No one can claim it is theirs.
Then as a sole proprietor, you’re running several streams of income under your one name, and if they are very different from each other, they need separate forms.
I’d suggest keeping it simple and using one name for all if possible, until you need to actually branch out as you’re making too much and create separate businesses in which case you could then incorporate each line of business and then have to report and track each line separately anyway.
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Ryan
Thank you for such a detailed reply Sherry.
The reason I mentioned ODSP is because they specifically require I open a business account (which requires a business license). I know keeping business and personal separate is mandatory, but I could probably figure out a different banking option or postpone acquiring a business account until I am actually bringing in income, if ODSP didn’t require that caveat. I have to report to them every month.
Yes, you are right…The more income I make, the more our ODSP is reduced. We are allowed to make an extra $200 per month. After that, they take 50% of earnings off our check, which is based upon the average across a 12-month period of earnings, and then only affects the next years monthly payout. My objective is to get us completely off ODSP and be making a full-time income online within the next 24 to 30 months.
Regarding registering as a sole proprietor under my own name, can I use just my first name? Or my middle and last name? Or do they require I use my first and last name?
I know there are many people (200 in my city alone via the phone book) who have my same first and last name, so it’s not like it can’t be used by someone else. My full name has even been taken by someone else as a dot-com.
I was thinking for a collective business name of just using say my middle or last name with the term “Media” or something else. Do you have any recommendations on that or another choice?
I don’t really feel like outing my full name on a business license, for the same reason I get domain privacy (potential spam).
Do you have any issues with spam as a result of using your real name on your business license?
I really wish Canada had the option of an LLC, I would go that route. I read incorporating doesn’t make sense until you’ve hit $70,000 per year.
I like your idea of waiting until all the blogs combined are generating a certain amount of income and then splitting them off as separate corporate entities.
I agree, simple to start is best. I’ve never registered as a sole proprietor before, so understanding what I can and cannot do when it comes to a name hasn’t been well explained to me so far.
All my blogs and any potential courses will be on different subjects, most within the realm of creativity, but to me they all fall under “educational”, which is why I am considering adding the term “Media”, or something else, in the name on the license.
Maybe I am over-thinking this…lol. Though, it seems like something I want to get right the first time. 🙂
All your help is appreciated. Thank you.
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Sherry of Save. Spend. Splurge.
Okay, so ODSP has rules, which make sense.
You don’t need to register anywhere as a sole proprietor. No papers nothing. It basically means you are running a business under your personal name.
Where I said you may want to register is your generic business name, but that is separate from being a sole proprietor.
You can go to the Registrar and basically give a generic name like: Lemon Media Group
That way you have the name to transition into when you incorporate, and you can use that one name for all of your blogs/income streams
After that, you have registered the name ($100 I think) and you run your business.
When it comes time to file for taxes, the income from this business goes on your PERSONAL taxes – no need to file business taxes like a corporation, and in those forms I mentioned above — one form for each site / stream and/or only one form, depending on what the form says you need to do.
I have not ever used my own name as a registered business name. I wouldn’t recommend it, I’d actually just do sole proprietorship which is intrinsically already under my own name (personal taxes), and then register your formal generic business name.
Then at least you have that registered business name for later.
Does that make sense?
I also don’t think you need separate corporations or businesses. Frankly you can put it all under one business name. I was thinking if you did a business for educational training then another one for selling flowers, then yeah they aren’t related. What you are doing sounds related to each other. I’d keep it simple and not overthink it.
Does this make sense?
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zahid
Hi
I need to know my friend he runs his online clothing business from outside canada (he isnt resident of Canada) but he needs me to take care of his payments through my Paypal business account (which i don’t have yet).
I do my full time job . What if i receive his website payments through Paypal so do i need to pay tax or get registered myself partner or need to get business number in Saskatchewan.
Please reply me.
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Sherry of Save. Spend. Splurge.
Yes. If you receive payments, the government can assume you are doing business and will check to see if you are filing taxes on Dias income.
You can stay as a sole proprietorship and file it under your personal income taxes. Read my post again.
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Nancy Lynn
Hi Sherry, Thank you so much for writing this, I have been doing my own searches on where certain business expenses go, so far this is the only site I found that has comprehensive explanations and examples. I was wondering if you could tell me which expense category stock photography and clipart go under? I have tons of stock photos purchased through a monthly membership. Do you think the CRA would consider something like stock photography as a CCA because it is an intangible asset? When we buy stock photography we aren’t really buying the photo but the license to use the photo? I am really stuck on where these expenses go on the tax form. Thanks for your help..
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Sherry of Save. Spend. Splurge.
You are so welcome
Stock photos for me, would go under ADVERTISING. You are using the photos for marketing / advertising, it is a license and therefore not consumable, and not an asset to depreciate, so you wouldn’t do any Capital Cost Allowance on it.
Hope that helps.
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Nancy Lynn
Thank you, that helps tremendously! Much appreciated. All the best to you. ~ Nancy
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Christine
I bought computers and programs and office supplies…. I want to register when we get back to Canada -can I still claim these expenses?
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Sherry of Save. Spend. Splurge.
Technically no. You don’t have a company, although if it is a sole proprietorship, you could count it as part of home office.
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Christine
I have multiple sites under one company and going to register as a business in July. Does this change anything ?
But I can do it as home office after the fact?-
Sherry of Save. Spend. Splurge.
Would have been better to wait, but you could move those items as assets under the company, or enter them as expenses after the fact.
For this particular nuance, I’d call Revenue Canada and see what the rules are; if the expenses can be applied to the sole proprietorship, and then partly applied to the corporation, or if you can put it all under one or the other.
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Monica
Found this article very informative with lots of relevant information. Question – My husband and I operate a blog together and it is not an incorporated business. When we are declaring income from the blog, does it matter how we divide the income for individual tax reporting? Thanks so much!
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allan
Awesome article. It triggered a thought/question. If you have a blog/website that would include how to install parts — brakes on a horse trailer… a garbage disposal under a sink… a new carburetor on a dirt bike… a hand-pumped, solar-heated, rain-water-filled, bidet nozzle for outhouses — can you claim the purchase of the item as an expense?
Assuming you regularly blog — about horses, home appliances, dirt bikes, outhouses.
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Sherry of Save. Spend. Splurge.
Technically yes… if you’re reviewing and talking about how to buy or maintain these items.
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mcgee
If the taxman thinks that you personally benefited from the purchase of brakes, garbage disposals, etc and you claimed the full amount they will come after you.
If you sell those items after you are done blogging you need to claim the disposition as income.
If you use them for your personal needs after you are done blogging about them it’s considered a deemed disposition and the market value needs to be claimed as income.
Trust me there’s no free lunch when it comes to tax.
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Michel Tyo
I’m discussing starting a travel blog with tour guide referrals as I have travelled a bit and met great guides and locals. and am meeting up with guides from Indonesia and thailand and flying them in and traveling with them in Bangkok and other areas of Thailand for pictures and research
Can I expense any of these travel costs?
Can any of these costs be considered expenses
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Sherry of Save. Spend. Splurge.
Yes if you are able to justify that these are real expenses related to the blog. Note dates, times, keep receipts.
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Aline Chahine
Hello ..
so i had a website / blog and i earned an income from it which obviously i have to report. The thing is i sold the website mid-2017. and received the funds in my canadian bank. How can i report this what form? i am totally confused
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Sherry of Save. Spend. Splurge.
Just under self-employed income in your T2 and put how much you made.
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Carolyn
Hi Sherry.
This post has helped me a lot in reporting my income in blogging (as a side hustle). So I’m sharing some tips to other bloggers to pay it forward.I noticed that a self-employment CPP was deducted on my refund. I would have owed the CRA if not for the refund. The CPP will be deducted in the filing of tax (once a year as opposed to monthly with a regular job). But I wasn’t sure if tax was also deducted; I have to read the tax return and ask the tax preparer.
To avoid paying the CPP (and probably tax also), increase the tax deduction on your regular job. I sent the form in the HR and will probably do it again this year. You can also register to Service Canada to check if the CPP contributions for regular and blogging are updated . . . and be prepared to be asked if you are retired already. (I wished.)
Or you could save up for the CPP deduction for blogging. What I’m confused of is if the CPP for blogging is ONLY equivalent to the employee (the blogger), excluding the employer since it’s a self-employment? Any thoughts?
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Dawn
You pay both the employer portion as well as the employee portion of CPP. So you would pay double the amount of CPP. Upside, is that you don’t pay into EI.
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Sherry of Save. Spend. Splurge.
You can opt into EI however, if you plan on having more than 1 kid, (3 I think is the break even point to “make it worth it”), but you have to pay EI forever you can’t just opt out once you’re done maternity leave.
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Ashley
Question. I’m a Canadian, and have been blogging for a little under a year now. The money I do make from blogging which has been negligible so I haven’t bothered reporting it for a few reasons. One, its super tiny, and two, I don’t live in Canada. However, should I start making any decent amount of money from my blog (I’d also like to get into e-commerce soon), and if that money goes into my Canadian bank account, would I still file/account for it? For tax purposes I’m a non-resident so I’m sufficiently confused.
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Sherry of Save. Spend. Splurge.
Whoever you pay taxes to for income is where you should be declaring it. I do not think Canada charges tax to non-resident Canadian citizens unlike the U.S. where no matter where you live, if you are a U.S. citizen you pay tax to the U.S.
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Spacey
Hi! Thank you for such an in-depth post. I would appreciate it if you could let me know what you think about my situation.
I started blogging as a hobby in late 2016. In 2017 I started getting free products for review, but only recently got a few little paid posts. I think in general I get a few products for review every month. For reference, in 2017 I will have about 100$ in paid income, and a few thousand in free products. I still consider this as a hobby, because I am barely making anything and don’t think I will start earning real money for at least another year or two. I didn’t even get a paid hosting for my blog yet.
Do I claim only the 100$ of income on my tax return, or the whole few thousand of free products? If I have to claim everything, can I then claim expenses, although I don’t expect to have a profit for some time?
Thank you in advance!
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Sherry of Save. Spend. Splurge.
1. You claim everything, including the amounts of the items you got for free.
2. You would be considered a small business, but a sole proprietorship under your own name.
3. Yes you can claim some expenses related to the blog. Just be careful your business isn’t losing you money every year, or it just looks strange.
4. If your income is low and your expenses are low as well, you should net a “profit”.. I mean you’re not paying hosting, you’re getting a couple thousands worth of stuff per year, it means your expenses can’t be something like a $5000 camera, you know? Be reasonable.
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Jack Monoloy
Very useful post! 🙂
Does anyone know if you still fall in that NAICS code if you sell “Courses” on your blog? I have courses on time management, life-planning, etc. Here are a few other NAICS codes I thought it might fall under including the 711513.
611690 – All other school and instruction
711513 – Independent writers and authors
519130 – Internet publishing and broadcasting and web search portals
454110 – Electronic shopping and mail-order houses
611430 – Professional and management development training-
Sherry of Save. Spend. Splurge.
What makes you the most income? Blogging or your writing? That’s your NAICS code.
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Chrissy
I just stumbled across this post because I’m hoping to start my own blog soon. Thank you for the amazingly thorough info Sherry! I’ve read a few of your other posts and am really liking what you have to say. Looking forward to reading more!
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Sherry of Save. Spend. Splurge.
Hi Chrissy! Congratulations. If you’re interested, I also have a book out on the topic on making money: Start a Blog Like a Boss.
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Chrissy
Thanks Sherry, I did see your book and am definitely considering it!
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Parth Patel
Thank you so much for this information.
I am new to canada and I am starting to transfer my blogging revenue accounts from india to canada. Thus I need to know about tax systems here before doing that.In india, if annual income is below certain amount then we can skip the income tax return if we want to. So I wanted to know if I earn like 100$-200$ per month from blogging then Can I skip doing all this tax stuff or it is compulsary?
And also , another scenario is – I am earning around 100-200$ per month from blogging and around $1k-$2k from jobs so total might be $2500 per month then is it compulsory? Can I skip Blogging income from return form?
Thanks,
Parth Patel-
Sherry of Save. Spend. Splurge.
We do not have such a system here in Canada. If you earned income (any income), you must pay at least 15% taxes on it (federally) and a percentage provincially (varies by province from 5% – 11%).
Otherwise, if you earned $0 (nothing at all, which is NOT your case), you don’t need to technically file a return (but even if you earned $0, I’d do one anyway to have a tax trail and to report to the government that you have $0 in income otherwise they may come after you and start auditing and asking a lot of questions).
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Tracy
Thank you so much for this article. I am trying to figure out what to do with my Canadian taxes as I just started blogging in 2016. I have made about $3K and spent about $10K on the blog. With it being a loss do I have to claim it at all? From your post, do I take it that if I did declare the income and expenses that I should get tax back? Also I ad expenses from 2015 in which year I made no money – can I claim expenses from that year too?
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Sherry of Save. Spend. Splurge.
Yes to all of the above.
AS for “tax back” I do not know if you will or not, it will only count as a loss against your income taxes and lower your taxable income slightly if you are a sole proprietor, but it isn’t a guarantee of a tax refund.
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Ruby
This is a great topic to write about, really informative blog post thank you! Not enough information is out there in regards to paying your taxes as a full time blogger. Ruby http://taxloan.co.uk/capital-gains-tax/
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CBM
Thanks so much for writing this article! I just applied for Amazon’s affiliate program last night & was accepted into Google Adsense a week ago, so today I started wondering about the tax implications & then thought, “Uh oh, what have I gotten myself into?!” since Amazon & Google are American companies, and I’ve never been in business for myself, this all seems quite overwhelming to me! So, here’s my question re: this paragraph that you wrote:
“You are considered to be running a business if you REGULARLY make an income. If you just wrote ONE article for ONE site as a one-off thing, it’s not a regular income, much like if you sold a few pairs of shoes but you don’t do it regularly, it is not an income.”
OK, so here’s my situation. I started a blog & YouTube channel back in January 2016 but only just signed up for Adsense & Amazon’s affiliate program in the past few weeks. The blog & YouTube channel are all part of the same thing – I post my YouTube content on why blog weekly & occasionally I’ll write a full blown article on my blog as well. I also have another blog that is totally unrelated to the YouTube channel’s blog that I post to once in a while that i added Adsense code to. So far, I’ve earn $0.81 on Adsense but Google doesn’t pay out till your revenue gets to $100, so I have yet to see any of that money. As for Amazon, I’m still in the process of setting up my affiliate account payment info, so I’ve made $0 on that. Last but not least, I also got some gift codes for the iTunes store in exchange for doing a review on my YouTube channel, so I understand I have to claim the $ equivalent of those, too.
But this hardly counts as “regular income”, or does it? Because I post content weekly does it technically count, even though no money has hit my hands yet other than those iTunes codes??? Does this actually count as a business, and do I need to fill out that T2125 in 2017? I don’t want to register a separate business, I’d rather just keep everything under my personal income. I am just starting out & $0.81 is hardly regular income, LOL!
I wish the government would just let us claim it under the “other income” box, LOL! I pride myself on doing my own taxes online but I just might have to go to an accountant next year if this is going to get complicated! I’m also wondering, if it’s not regular income yet, should I still be deducting expensive such as web hosting costs, internet & cell phone or should I just claim the little amounts that I’ve received & leave it at that? Also, re: sole proprietorship, am I right in understanding that if you don’t register your business, then you’re a sole proprietor… I’m thinking it might be simpler to un-monitize my content & wait till i have a big enough following to make it worth all this hassle, especially if I have to claim $0.81 as income when I’ve not even been paid it yet. Sorry for rambling & sorry if these questions sound stupid. I read your article twice & I’m still a bit confused!
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sherry@savespendsplurge.com
1. That is regular income even if it isn’t paid out because you don’t make enough.
They regularly WOULD pay out the $100 every month if you reached the threshold.
2. It does not need to be filed as a separate income under a business if you have not created a corporation or filed a business name. I would say you can claim it as “sole proprietorship” income (exactly what you said), which is under your own name, but on a separate tax line (I think it is “other business income” or something like that). You will however need to note if you spend more than you made.
$0.81 in revenue
$5 in expenses= -$4.19 can be claimed on your “other income” tax line, but if you keep going into negatives for more than 3+ years, they will come after you and audit.
It is up to you to claim it or not, just make sure that you are making actual money in 3 years… they are lenient but not forever as they will think you are using this “business” as a way to pay less taxes, true or not.
3. You do not have to claim the $0.81 as income yet if you have not been paid, it is considered to be put under “accounts receivable”, but until the money is in your pocket, I myself do not claim it as income.
The tricky part is you have expenses that far outweigh your income. When do you think you’ll make money?
4. It sounds to me like this is a hobby more than a business for now, but if you have a real business plan and are serious about it (not as a side lark), then start claiming those expenses as negative income for the tax year.
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Jolina
This is VERY helpful thank you! I started my blog in Jan 2016 and I already filed my taxes. If I start to monetize in April 2016 (for example), can I still claim the expenses from the start-up? Like camera lenses, books, lights, hosting fee, domain name? Also, since I run a food blog, can I claim the ingredients as expenses?
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sherry@savespendsplurge.com
You filed your taxes for 2015 right? Not 2016.
You can’t claim 2016 expenses for 2015. You can save them for your next year unless you have a corporation and you have a different fiscal year end. Otherwise, if it’s a personal business (sole proprietorship) then it’s Jan – Dec.
You can claim all the expenses from your start-up for sure for 2016 (when you do taxes in 2017).
For the food blog, I think if you can justify that ingredients are for the purposes of the blog specifically for the photos, and if they ever audit you, you can prove it, then by all means consider it a supplies as part of doing business.
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Magnolia
This is a great guide. What would you do if you took an internet course related to blogging? Would that be called other expenses?
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save. spend. splurge.
Yes, I’d throw it under “Other Expenses” and then specify what you mean like “Education / Training”.
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Bryan
Great post. I am thinking of starting a blog with affiliate links but I wanted to get all my ducks in a row first. This post really helped. I have a question regarding affiliate commissions. What is the industry code for affiliate commissions? I have done some Google searching but to no avail.
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save. spend. splurge.
Well your revenue may be from affiliate links, but the industry code for the blog doesn’t change.
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Carolyn
Finally found the information I’ve been looking for. I guess I’m still going to do my income tax return this year with the help of tax software. No accountant yet.
What about the fee for online courses or ebooks related to blogging, can I claimed such expenses? I also attended WordCamp last year and the anti-virus software should I include these to my expenses?
Thanks for the information. I guess it is best to start early in learning more about the world of sole proprietorship than later. Now I can use the folder I labeled “blogging” on which I keep the receipts.
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aline c.
Hello,
i am canadian permanent resident still living outside canada but i am moving this coming december to toronto.
My question is, i have a google adsense account and currently i earn around 1000 Euro each month (in euros since i am getting paid from google ireland). should i declare this income?
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save. spend. splurge.
Do you pay taxes to Canada? You have to declare the income to whichever country you pay taxes to.
Once you move to Canada, it will be Canada, but at this point it sounds like the majority of your time this year was spent outside of Canada, so you’d pay it to Ireland (?).
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aline c.
@save. spend. splurge.: thank you for your reply, i live now in beirut so i dnt pay taxes – all international income is not subject to tax. as for canada, it seem i have to start declare as soon as i move.
anyway thanks alot..
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save. spend. splurge.
In that case you need to pay taxes when you’re back in Canada.
We don’t have that rule in Canada like the US that if you’re a citizen you have to pay American taxes no matter where you reside.
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Amanda
I’ve read on a few American blogs that you have to have a certain amount of blogging/freelance income before you have to claim (some said $400, others said $500). Do you know if this is true and/or true in Canada?
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save. spend. splurge.
In Canada if you earn even $1 in blogging, you have to technically claim it as income. Any and all.
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Sustainable PF
Since most bloggers would work from home (calculating their eligible deductible expenses as you demonstrate) I am wondering about the following …
Moving expenses. If a person sells and purchases a new property to live and work in, would the expenses be deductible? The savings could be massive when you think about RE commissions, legal fees, home inspection, moving company etc.
I haven’t found anything concrete via the web so I thought to ask here.
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save. spend. splurge.
As far as I know, no, although if you wanted, you could always argue that a certain percentage (10% for instance, if that’s the size of your home office) is attributable to the move.
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Potato
@Sustainable PF: Generally, no.
You have to move a minimum distance *for work* for moving expenses to be deductible, which is usually only allowed if you’ve changed positions or if your work location is moved on you (e.g. company moves you to another branch). It’s very hard to make the case that you moved for work when you work from home and continue in the same job. If you did manage to make a case, I don’t think you need to prorate them as with work-from-home expenses: the full amount should be deductible.
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save. spend. splurge.
@Potato: Thanks for the clarification / good point about moving for the job. This makes sense.
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Sustainable PF
One thing I think has been omitted here is improvements to your home. Structural improvements are not applicable but upgrades to your home (place of business) should be deductible.
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save. spend. splurge.
I made a slight mention of that:
MAINTENANCE AND REPAIRS
…. This is not a section where you can record any maintenance or repairs on your home such as if your home floods and it also flooded your home office. You need to use the Business Use-of-Home section to declare that amount.Under Business Use-of-Home, you could put it under “Other Expenses” but you need to justify this.
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save. spend. splurge.
Oops, turns out I did put it in under Business-Use-of-Home:
MAINTENANCE
Put the total amount you paid for maintenance (e.g. your roof fell in). You will need documents to back this up.
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Potato
I wouldn’t say stop blogging if you don’t make a profit… I haven’t made a profit ever in 15-some years of blogging. Just don’t try to claim losses on your taxes for your hobby that costs you money (indeed, I wouldn’t bother filing anything until the first year you turn a profit to be on the safe side — of course if you do start claiming losses from day 1 and don’t make money after 3 years then maybe you should quit because you’re telling the CRA it was for a business and not a hobby… yeah, leave it as it is).
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save. spend. splurge.
I’d agree with that. That said, as far as I read the CRA does view ANY income even $0.10 as a reason to file for your taxes.
Then again, if you are blogging and let’s say only making $10 a year but your expenses are $300/year, they will definitely get suspicious. It’s a Catch-22, really.
Perhaps it also has to do with it being “an intent to do business” with blogging. Personally they should put a threshold on these things like $1000…
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Bet Crooks
One thing I haven’t got a straight answer on is whether HST is applicable to the referral income from ING Direct. I’ve assumed it is applicable and I report it, but I don’t have to remit it because I have such a large offsetting HST cost from our internet service. (From what I’ve read we don’t need to remit HST on AdSense because they don’t operate in Canada.)
Do you see it the same way or….?
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save. spend. splurge.
For me it is applicable because it is an affiliate program that you are promoting via your blog (am assuming this is what you are doing), which is why you are getting more money, no?
From what I read you do not need to remit HST on Adsense either because they aren’t in Canada, but ING yes.
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Laura
Also, I think its really important to let people know what they have to claim as income. When you get free stuff in exchange for blogging or a review it’s not free – it’s actually income. 🙂
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save. spend. splurge.
Oh yes! Excellent point, I will make a note that we should claim that as well.
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Laura
Thank-you so much for this post! I do have a question though. I was told by an accountant at Blissdom last year that we could claim 100% of cell phone and internet costs because we couldn’t do our business without those items. I’m curious as to where your answer on this expense came from? (and which is right?)
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save. spend. splurge.
I suppose it depends on how you argue it if you come up against the CRA in an audit and they question it.
See, I was always of the belief that if you had a business-only cellphone and an office where the internet was ONLY for business, then yes it is a 100% write-off.
The problem is that we normally don’t have two separate cellpones or internet lines, so even though we couldn’t do business without it, I always conservatively err on the side of claiming what is the business-only portion of that usage.
The way I see it is that if I have a cellphone and half the time I am using it for personal calls, and the other half for business, I can only claim 50%, and the same goes for the internet if your entire family has access to the internet but you are really only using 30% of that as part of blogging.
It’s kind of a blurry, hazy line that could go either way.
I suggest you go with your gut and what you think is right, and more importantly, what you can back up to the CRA if they do decide to audit you and question that expense. 🙂
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Laura
@save. spend. splurge.: Yes, that totally makes sense to me. I was just curious as to why she would be so sure about it. I guess you really just have to be sure you can explain it yourself! Thanks!
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Lindsey @ Cents & Sensibility
Thanks so much for writing this article! This will be helpful for when I have to file taxes this year. I made a little bit of money last year so it won’t be live or die but it will be good practice!
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Anne @ Unique Gifter
It is times like these that I am extremely thankful my Father in law is a personal income tax accountant! Good point about marking down travel though, if I ever do go somewhere for blogging purposes!
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save. spend. splurge.
@Anne @ Unique Gifter: Then you should be giving us tips! 🙂
I’ve been doing taxes for stuff like this (sole proprietorships) since I was 16, and once I became a freelancer I had to start doing taxes for corporations too, which is a lot more detailed but surprisingly not that hard if you are organized.
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Emily @ Urban Departures
I love how detailed this is!!! No blog income for Urban Departures, but I still think this post is extremely valuable.
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save. spend. splurge.
@Emily @ Urban Departures: Well I hope it helps. It can get kind of confusing. 🙂
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jane savers @ solving the money puzzle
I made $0.04 cents on my blog yesterday so I am on a roll and will use this information in the future.
This is the last year that I am forced to go to an accountant and I won’t bother claiming any expenses for the business because he will just charge me more to complete the return. I have to go to an accountant because he splits the children’s extra tuition credits between myself and my ex-husband. This is the last year for that.
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save. spend. splurge.
@jane savers @ solving the money puzzle: Oh that’s a good thing then. You can claim expenses against those $0.04.
You can use tax software instead (I find it works just as well) or do it by hand. I did it by hand for many years then got lazy and started using software.
Or they have free tax software online as well.
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Alicia
Thanks! I don’t have any income for this tax season, but next year might be different.
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Liquid
I didn’t realize the expenses were so orderly categorize before. Great information here 🙂 Bookmarked this post 😀
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save. spend. splurge.
@Liquid: Yes it’s pretty orderly.. but it is up to interpretation for a lot of things so you have to be careful in reading the categories.
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Melanie
I started a travel blog last year and this year I will be making more money. If most of my income is coming from outside of Canada then 1) do i claim income received as foreign can I use the amount that is deposited into my bank account as Cdn funds (IE paid by Paypal in US, but deposited as CDN $) and 2) I am going to be working with travel companies in other countries. If I have an agreement with them where I ‘sell’ their service but add on a commission then pay them, how do I claim that? IE The tour costs $500 US and i sell it for $700 US (paid to me). Then I pay them $500 and keep the $200 as comission. Do I claim the $700 or the $200 as income?