A tax guide for social media influencers

If you’re a social media influencer earning money from YouTube, Instagram, TikTok, Facebook, Twitter, or Blogging – you’re likely wondering how you should go about calculating your taxes for the year. 

The CRA has actually published a brief guide on how social media influencers should report their income here. In this post we will cover some of the details published by the CRA and highlight the major tax items that you need to be aware of when it comes to reporting and calculating your income for tax purposes.

Income for Influencers

Social media influencers can earn income from several sources. We would categorize the income stream for social media influencers into two main categories: (1) monetary compensation, and (2) non-monetary compensation. Examples of streams of income in these categories include:

Monetary compensation:

• subscriptions 
• advertising 
• sponsorships
• merchandise sales 
• tips or donations

Non-monetary compensation:

• Free products 
• Free trips 
• Free clothes
• Basically, anything that is sent to you for free!

A quick note here, non-monetary compensation is quite unique to the job of a social media influencer. In most forms of employment, compensation is usually monetary.

Hence, it’s quite important for you as a creator to keep track of the value of “free” products and services you receive during the year as the value of these items will need to be added to your income on your tax return.

GST/HST Registration

If your income for the last four quarters (in total) is greater than $30,000, you are required to register for GST/HST with the CRA. 

To get registered, you will need to call the CRA business hotline at 1-800-959-5525 and ask them for a GST/HST number. Once you have your number, you will be required to charge GST/HST to anyone who does business with you. If you’d like to learn more about GST/HST, we recommend that you consult our blog post here

Please note that if you’re an influencer that does a lot of business in the USA or internationally, you’re not required to bill GST/HST to clients outside Canada. 

Tax Installments

If you’re a seasoned social media creator and have paid taxes in the past, you could be on the hook to pay tax installment payments for the current tax year. How can you tell?

Well, if your taxes owing for the previous year was greater than $3,000, then you will be required to pay the CRA tax instalments for the current year. 

The CRA requires individuals and companies that have a tax liability of greater than $3,000 to prepay tax via installments for the current year. If you don’t make any tax installment payments, you will likely be required to pay interest and penalties.

Let’s cover an example to understand how tax installments work:

Tax year – 2022 

Your Taxes owing = $4,800

Tax year – 2023 

Quarterly installments required should be calculated as follows: Take the taxes owing from 2022 and divide it by 4 (for quarterly installment payments)

$4,800 / 4 = $1,200 

Therefore, you must make quarterly installment payments of $1,200 in 2023.

If you’re interested in reading more about tax installments and deadlines, read our blog post here.

Self-Employment Taxes

If you’re an influencer or content creator and you’re not incorporated, you will need to self-report your income. This means that you will have to calculate your income and expenses on your own and report these amounts on your tax return. 

At a high level, the income on which you will pay tax will be calculated as follows: (1) Your total earnings – (2) Your total expenses = Your Net Income. The taxes you owe will be calculated on your Net Income. 

This is done on a particular form on your tax return called Form T2125. We’ve published a blog post here that outlines how you need to fill out form T2125. If you’re finding the process of filling out Form T2125 complicated, don’t worry, you don’t need to do this alone! Our team would be happy to help you fill out Form T2125 so get in touch with us here.

Expenses you can write off as social media influencer

There are many expenses you can write off as a social media influencer provided that these expenses and costs are incurred to generate business income from your work on social media. Below is a list of the most common expenses you can deduct from your earnings to calculate Net Income for tax purposes

Home Office Expenses

Most social media influencers work from home. If that’s the case, you’re eligible to deduct certain costs for your home in your business such as:

• Insurance
• Mortgage interest
• Electricity
• Property taxes
• Maintenance

All the costs listed above must be prorated by the square footage in your home that is used for your home office. 

Equipment and Gear

If you’re buying equipment (such as camera, mic, lights, etc.) or furniture (such as a desk, chair, etc.) to record videos and film content, these purchases can be considered assets owned by your business. They will be written off gradually in the business via deprecation. 

Editors, contractors, and staff 

If you’re hiring editors, contractors, and other staff members on your team to help you film, write, and record content, you can expense their salaries or payments made to these individuals as a business expense.

Phone and Internet

Given that your phone and the internet are essential costs incurred to earn income as a social media influencer, the portion of these costs incurred to generate income from your work as a media influencer can be deducted. 

Travel

Travel expenses includes flights, hotels, and meals. If the trip you’re taking is for the purpose of earning business income from social media, the cost of your trip is deductible.

Meals

Meals are 50% deductible for tax purposes. Be sure to hang on to your receipts to make sure that in case you get audited, you have back up to support your claims!

Vehicle Expenses

Like home office expenses you can deduct vehicle expenses based on the number of kilometers you drove for business. To support your deduction with CRA, we would encourage you to keep a detail mileage log with the total kilometers driven and distances for all trips that are for work purposes. Eligible car expenses you can deduct based on the mileage driven for work purposes include:

• Fuel and oil
• Insurance
• Maintenance and repairs
• License and registration
• Financing (Interest only)

US Withholding taxes for Canadian social media influencers

If you’re an influencer based in Canada and have earned income from the big US based social media platforms like YouTube (AdSense) or from Facebook (Meta), you have to make sure that you’re not paying withholding taxes in the US. We see a lot of social media influencers who are paying taxes in the US, when they shouldn’t have to!

In order to stop paying withholding taxes in the US, you will need to fill out a W-8BEN form which is an IRS form completed by non-residents of the US to certify that your country of residence is not the USA. Once you’ve filled out this form and have submitted it, the social media platforms will stop charging withholding taxes on your earnings – this way you won’t be paying tax in the US anymore.

Let us help you. Do you have questions about your tax situation? Get in touch with us here or sign up to get more accounting and tax tips in our newsletter below.

The accounting and tax information provided in this post does not constitute advice and is meant to be for general information purposes only. The information is current as at the date of this post and does not reflect any changes in accounting and/or tax legislation thereafter. Moreover, the information has been prepared without considering your company or personal financial/tax circumstances and/or objectives.