As more Canadians seek additional income streams through the gig economy, understanding the tax implications of side hustles becomes crucial. According to Julie Seberras, head of wealth planning at Manulife Wealth, these earnings are taxable and must be reported on annual tax returns.
Seberras emphasizes the importance of meticulous record-keeping for side-gig income, advising individuals to maintain receipts and invoices for all earnings and related expenses. These expenses, she notes, can be deducted come tax time, including reasonable costs associated with operating a home office, which can be claimed proportionately.
Moreover, Seberras highlights a threshold: once side income exceeds $30,000 annually, individuals may need to charge and remit GST or HST, depending on their province of residence. To handle this, she suggests keeping funds separate and readily available for quarterly remittance.
Looking ahead, Seberras advises side hustlers to anticipate their tax liabilities and set aside funds accordingly. This preparation should include accounting for both income tax and contributions to the Canada Pension Plan, which self-employed individuals are responsible for in full (both employer and employee portions).
In practical terms, Seberras recommends setting aside a portion of side-gig earnings throughout the year to cover tax obligations, reinforcing the notion that regardless of the nature of the side hustle, it remains subject to taxation.
By staying informed and proactive about tax responsibilities, Canadians engaging in side gigs can ensure compliance with regulations and avoid unpleasant surprises come tax season. Seberras's insights serve as a valuable guide for navigating the complexities of earning extra income in the gig economy while remaining tax-compliant.
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