Are you a social media influencer? Here's what you need to know
CRA SOURCE ARTICLE
What is a social media influencer?
Social media influencers use social media platforms, such as YouTube, Instagram, Twitch, Facebook, Twitter, or a blog to publish posts and build up followers of their content. Influencers who generate monetary and non-monetary income through social media may be carrying on business activities and earning business income.
Did you receive subscriptions and perks like merchandise and trips or other income?
If you earned income by posting pictures, videos and more on your social media channels that involves product placement or product promotion, you may be undertaking a business activity. You can earn income from your social media activities in many ways, both monetary and non-monetary (barter transactions), including, but not limited to:
subscriptions to your channel(s)
advertising (clickbait and brand advertisements)
sponsorships
calls to action
merchandise sales or commission on sales
tips
perks such as products, clothes, trips or other gifts
referral codes
Income tax implications
If you are carrying on a business through your social media channels, you must report the income (both monetary and non-monetary) that you earn through these activities on your income tax and benefits return. When reporting non-monetary income, you must use the fair market value of the item received. The Canada Revenue Agency (CRA) will generally consider your social media activities to be business activities provided they are not a personal endeavour.
GST/HST implications
If your online activities are not a personal endeavour, and your total taxable supplies are more than $30,000 over four calendar quarters, you will need to register for, collect and pay to the CRA the goods and services tax / harmonized sales tax (GST/HST) on all taxable sales from your online activities. You can get more details on GST/HST registration requirements at find out if you must register for a GST/HST account.
Business expenses
If the income you earn from social media activities is considered business income, you may be able to deduct eligible business expenses. To be deductible, expenses must relate directly to your business activities as social media influencers. Your expenses must be reasonable, not personal in nature and you must be able to support them. To learn what qualifies as an eligible business expense, go to business expenses. In addition, the amount you can deduct in a year for an expense depends if it is considered a current year expense or capital expense. For more information, go to current or capital expenses.
How to correct your tax affairs
If you did not report your income from platform sales and social media activities, you may have to pay penalties and interest in addition to the tax on the unreported income. By correcting your tax affairs voluntarily, you may avoid or reduce penalties and interest.
To correct your tax affairs (including corrections to GST/HST returns) and report income that you did not report in previous years, you may:
Submit an application through the Voluntary Disclosures Program. If accepted, you will receive prosecution relief, and in some cases penalty relief and partial interest relief that you would have otherwise needed to pay.
More information
You can find more information on this topic at taxes and the platform economy.
New rules regarding e-commerce services provided by non-residents in Canada came into effect on July 1, 2021. More information is available at GST/HST for digital economy businesses.
You can learn more about filing your taxes by visiting the links above or by scheduling a free consultation with us.