A survey of Canadians participating in the gig economy shows that a staggering 95 per cent do not feel confident that they are filing their taxes properly – and they may be missing out on claiming all applicable expenses and benefits.
“There are a multitude of benefits and credits available to self-employed and freelance workers,” said Yannick Lemay, tax expert at H&R Block Canada. “One of the biggest things my clients ask me is what expenses they’re able to claim, and the short answer is a lot!”
Here are some of the best refund-maximizing tips he shares with self-employed clients:
- Keep records. Save all receipts that pertain to your gig work, be it gas expenses if you drive for a ride-sharing company, cell phone expenses, parking costs or vehicle insurance. Separate these purchases, so there are no household or personal expenses on business receipts. This way, it’s obvious these expenses are work related. Lemay says it can look fishy if you’re claiming toilet paper for your Airbnb on a receipt that has other expenses clearly purchased for personal use.
- Report your income. Even if you’re paid in cash, it’s the law to report all income, including tips. This means keeping self-reported records of tips you receive per shift, which can be done with free apps, spreadsheets or even notes in your phone.
- Register for and charge GST/HST. When you earn $30,000 over 12 consecutive months, you’ll be required by law to register and charge these taxes. Depending on your situation, it might make more sense to start collecting this before you hit that threshold. You should also look into the quick method of accounting, which can help you save a lot of money.
- Make your contributions. All self-employed workers must pay into Canada Pension Plan (CPP). However, if you are a gig worker, you should do your research to see if this applies to you. If you intend to collect CPP or Quebec Pension Plan in retirement, you’ll need to have paid into it. Also, though it’s required, you might consider opting into Employment Insurance in case of an emergency.
(Source : Canada News)
