Tax time confusion (Canada) Please please help?
 

Hey everyone,

It's tax time in Canada again and I went to file my taxes and ran into an issue, I didn't have enough info so I have to go back. I ran into a couple of problems while there as well because I don't know much about taxes or businesses.

I run a few sites and am just an affiliate, promoting other websites, and most of my income comse in the form of rev share. Now, what exactly does that make me? I am not sure, and neither was the tax guy. He listed me as web designs & promotions. I am not sure if that is correct or not.

Then he asked my company name. I told him I don't have one.. because I don't. I always assumed I was just self employed. I don't have a boss.. I don't have customers.. I don't sell anything.. so am I a business, or just self employed?

Then, as he was entering information he got to a section asking my to list my websites AND web pages.. I have never heard of or seen this before so I told him I'll get back to him, but what do they expect me to do, list my web sites and the thousands of pages I have made, in 1 little text box? Have any of you ever seen or heard of things being required on a tax submission form?

And finally, he mentioned that next year the government may tell me I have to pay HST tax. Again I almost lost it I was so confused. As an affiliate who only makes money from rev share and signups does that even apply? When the user buys on the site I am promoting they pay the tax at that time, why is he saying I also have to? Is he just wrong? This doesn't sound right at all.

I do have a few ad spots up on my site, but it is through juicyads and when a user loads money onto their account to buy a spot, again, that is when they pay taxes on it - through juicyads. I know because I have done it myself.

If anyone can help me out with a few tidbits of into I would be so greatful, and I imagine others may be in the same boat and the info could be quite helpful.

Thanks you guys, and sorry for the long post.

- DumpManager

you are "self employed"
convert all your affiliate income into canadian dollars and declare that.
you can also claim all your expenses, hosting, a portion of your house, etc as an expense.

Thanks Shemp really appreciate it. That is how I figured it as well, and how I was planning on doing it.

Do you know what I would use as a "job title" if he asks me again? Or in what field, affiliate?

Thanks so much :)

Hi DumpManager,
I'm in a similar position myself. I haven't begun my taxes yet here in Canada but it will be the first as an affiliate. Did you just present him with all your paystubs from your affiliates you've collected? I'm worried I'll have to pay more money than I'll get back. I'm not sure if it would equal out though if I were to declare my home as my office and write off a few things.

Thanks

I didn't show him all the pay stubs because lots are digital. I just added up all the numbers, and I used the avg month exchange rates I got from x rates dot com for that. This is also my first full year of just doing my own thing.

I put away about 20% from every pay for tax time, knowing I would have to pay a tiny bit more maybe.

"webmaster"

Sweet, thanks again Shemp.

Very much appreciated my friend.

Hi DumpManager,

What you should consider doing is registering a business name. The cost varies depending on the province you are in, but the range is about $25 to $100.

You are "self employed".

You will need to gather up all of your bank statements to show any direct deposits, and all of your receipts. Hire a bookkeeper or ask your accountant to put it all together for you.

If you have been paid by Paypal, you will need to gather these reports up too. You should not try to hide it. You may hide it this year and maybe next year, but sooner or later you will be audited and be forced to produce your Paypal reports. Anyone who tells you that your Paypal account is not taxable in Canada or Quebec is wrong.

Next, ask your accountant to find you ways to save some money. For example, your computer, Internet connection, hosting fees etc, are all expenses.

Some items cannot be claimed as expenses. For example, your car and your gas. If you try to claim it as expenses, you will be asked to produce a log of where you are driving to. If you try to show too many things as expenses that you cannot justify, you will set off a warning light at the Gov'.

Depending on where you live and how much money you made last year, you may have to pay income tax on it. But since you are self employed, you may also have to pay employer/employee taxes and other contributions too. (Normally, when you have a regular job, your employer deducts a certain amount from each pay check to cover this, but since you work for yourself, you will have to. Essentially, you have to pay twice the amount of tax).

You should not have to pay GST, PST or HST because you aren't really re-selling any services. However the government may think otherwise. If they think you are buying and re-selling content or services, you will have to pay GST/PST/HST for all Canadian customers you sold it to. However, if you are paid as a commission for sales, you probably won't have to do this. For this reason, make sure your accountant is clear on this.

Canadian, and especially Quebec Tax laws, are very tough. Before taking anyone else's advice here including my own, hire an accountant. Trust me it will save you alot of money.

One thing you may also want to do is consider creating a corporation. If you are "Dump Manager Inc", there are many more ways to save on taxes.

Good luck!

Great info **********, thank you so much for the help.

I have all my numbers and they are all accurate. Trying to do everything by the books and legit.

Thanks for the help everyone

For starters, you need a new accountant.

hehe, that's funny. I was saying the same thing as I was leaving. lol

I hope for him that they will not look fot GST/PST or HST ...

If they do , they will still consider all income, including promoting foreign websites, as earned in CANADA, as they take for granted that the user ( client, subscriber ) could be in Canada at that moment.

I had my run ins with them, but most of my sales were hard goods, so easy to provide the shipping docs .

I do no longer do this type of work, so my taxes are pretty straight forward, tough complicated and expensive with the real estate side .

I hope not as well. Luckily for me, I haven't gone and broken any records. I make enough to get by and I am not going to claim anything over top top. My office space is 29.5 square feet, lol. I am trying to be as honest as I can. I like to be as legit as possible

What if I have proof via Google Analytics that the number of visitors to my site from canada is 3% during 2013 ?

Dumpmanager:
My pleasure.

Me too. If they start going into this, it will be brutal. We got into a huge fight with Revenue Quebec back in 2008. It cost us alot of money in accountants and tax lawyers and literally years to off our lives before finally winning the battle. I would never wish that experience on any small business owner.

Excellent info :thumbsup

They cleared up the rules on this a bit after 2007.

http://www.cra-arc.gc.ca/E/pub/gi/gi-034/gi-034-e.html

Basically you can GEO IP block Canada and not have HST issues. But this shouldn't be an issue for an affiliate.

Going for round 2 in 20 minutes.

Thanks for this info, I was checking out the form.

It has a spot saying "How many Internet webpages and websites does your business earn income from? Enter ?0? if none."

"Provide the main webpage or site address(es) (also known as URL address(es))"

Is it asking for my websites? Or the ones I promote that pay me.

If it is the ones I promote that pay me, is it the specific website I promoted, or their affiliate programs website?

Fuck this so confusing.. I started out as a guy with a website who put up a banner.. a year later, all these papers to fill out.. wtf.

:(

Thank you so much everyone for your amazing help!

I hope others also benefited from your info.

Taxes filed. Turns out I owe a lot LESS than I had saved for taxes.

Also, $30,000 is the threshold that if you cross you must become a registered business. Luckily for me I am under that.. I guess that's lucky. lol

Thanks so much everyone, you rule, and GFY rules!

- DumpManager

if you are an affiliate promoting a program outside of Canada you do not have to pay GST/HST

I just claimed zeros for that stuff and wrote them a letter explaining the situation...they were fine with it since you are basically selling your traffic/services to a foreign company.

If its your own site/program than is a different story

Thanks !

You should talk to an accountant although few will understand your classification unless they are familiar with this line of work but you basically are self employed and fall into "Internet Marketing" or "Affiliate Marketing". You should also check if you are taxed on "accrual basis" rather than "paid basis" - something not obvious to everyone and differs from country to country.

If a local account is too costly for you, hit me up and ill find you a professional offshore that will cost you no more than $15 USD per hour but they will need to learn about your business and read up on Canadian laws. However, if Canadian laws are a lot like British or US laws and the work is not too complex then it might not be too much of a problem.

An expert (offshore) professional will need to read up on it first: For the bargain basement price of $15 (US, naturally) an hour. Your best hope is that the offshore professional is not a slow reader of Canadian tax law.