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Taxation of Blogging Income in Canada & Related Tax Tips

July 7, 2016

As the social media world expands blogging and vlogging (video blogs) activities have been on the rise. These activities have become so profitable that many individuals have been pursuing it on a full-time basis, and earning significant income to support their lifestyle.

Since blogging is sometimes treated like a paid hobby which can be pursued along with a traditional job, unlike other professions requiring certain man-hours, many bloggers ignore the fact that income made from blogging is also subject to taxes.

Blogging can be treated as self employment

The Canada Revenue Agency (CRA) considers blogging which results in payment/income as a business activity. Income earned from blogging is therefore treated as self-employment income with the individual as a sole-proprietor. If you make money from your blog you should consult a tax professional and consider filing Form T2125: Statement of Business or Professional Activities to report any income made from blogging activities on your personal tax return.

Since blogging is considered a business it will incur regular operating expenses for which the taxpayer can claim certain qualifying tax deductions and credits. It is also acceptable that in the initial years the blogging business may not result in a net profit thus allowing bloggers to claim any losses on their tax returns. However, bloggers should be aware that claiming losses every year could make the CRA suspicious and result in an audit. In order to claim these losses there needs to be a reasonable expectation that the business will eventually turn a profit.

Various tax deductions you may be able to claim as a self-employed Blogger/Vlogger

Here is a brief overview of the various tax deductions that bloggers can claim for their blogging business. If you are considering monetizing your blog you should consider getting professional tax advice to avoid any tax issues.

  • Domain & Web Hosting Expense: A tax deduction can be claimed for expenses incurred to obtain a domain name. In addition any expenses incurred for web hosting and the annual fee paid for maintaining the domain name are deductible as these are ordinary and necessary expenses for a blogging website.
  • Internet Service Charges: Since an internet connection is necessary to access the website and carry out the blogging activities the monthly service charges are tax deductible. However, only the portion used for business purposes is deductible. Personal usage should be excluded from the expense deducted. For example, if the internet is used for 12 hours a day to blog, 50% of the day the internet is used for business purpose, and if the daily charge is $10, only $5 can be claimed as a business expense.
  • Computer, Mobile Phone, Laptops, Notebooks and/or Any Hardware and Software Expense: The costs incurred to purchase a laptop or any computer equipment or software is considered a Capital Cost. Capital costs are deductible for tax purposes based on CRA prescribed percentages each year. These capital items are grouped into Capital Cost Allowance (CCA) classes each of which has a set percentage which ensures that the equipment is deducted over its useful life rather than just in the year of purchase. However, do remember to keep the receipts as they may be necessary to validate the tax claim.
  • Home Office Expense: In some cases bloggers can deduct a portion of their household expenses in the form of a home office expense. If the blogger meets certain criteria they can deduct a percentage of their expenses such as: electricity bill, insurance, mortgage payments and other home related expenses related to maintaining a home office. However, as mentioned above for the internet service charges only a certain percentage can be deducted.
  • Advertising Expense: Expenses incurred on promoting the blog are deductible. These could include: giveaways, Google Adword expenses and most other advertising or promotion related expenses.
  • Stationery & Other Office Supplies: Expenses incurred on notebooks, printer ink, highlighters, storyboards and other stationery items incurred during the course of blogging can be deducted for tax purposes as well.
  • Legal and Accounting Fees: Legal expenses could arise if bloggers receive notices from other bloggers regarding copyright, plagiarism, and other such issues, making legal counseling a necessary expense. Also, individuals blogging on a large scale may need to maintain an accountant for proper bookkeeping of income and expenses. Therefore, legal and accounting expenses incurred by a blogger are tax deductible.
  • Travel and/or Conveyance Expense: Companies like Google, Facebook, Instagram, and Twitter often hold conferences and summits which bloggers need to attend to increase their viewers and followers on social media. Most expenses related to travelling such as flights, hotels and meal expenses which are not reimbursed may be deducted if they qualify and satisfy certain conditions. Consult your tax professional to avoid compliance issues.
  • Cell-phone Data and Other Utilities Expense: Blogging and tweeting requires bloggers to be in regular touch with their followers. As a result expenses incurred in relation to data plans provided by cellular networks are sometimes considered tax deductible expenses.

These are just some of the common blogging related expenses. It is best to consult your tax professional regarding the taxation of your blogging business activities. As a safe practice, it is good to maintain all receipts, invoices and bills related to your blogging expenses since you never know when an expense may qualify for a deduction.

AG Tax LLP Can Help

If you have any tax-related queries or need assistance with tax planning or filing please contact AG Tax. Our tax professionals are highly-experienced with U.S. and Canadian tax laws and can provide you the right guidance to handle your tax situation.

Aylett Grant Tax LLP is a full service accounting firm with a dedicated team of experts, who are highly-qualified and experienced in handling situations related to U.S., Canadian, and other international tax laws. We can assist with:

  • Canadian Personal and Corporate tax returns
  • Cross Border Taxation and Business Planning
  • U.S. Personal and Corporate Taxation
  • Disclosure of Foreign Assets and other information filings
  • Retirement planning
  • Estate Planning, Inheritance tax advice

To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at:

  • 416-238-5920 (Greater Toronto Area, ON)
  • 604-538-8735 (Greater Vancouver Area, BC)
  • 780-702-2732 (Greater Edmonton Area, AB)

 

Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.

ABOUTAylett Grant Tax, LLP
With offices across Canada, we are positioned to manage and process the full scope of your Canadian, US and US Canada cross-border tax filing needs.
OFFICEVancouver
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ABOUTAG Tax LLP
With offices across Canada, we are positioned to manage and process the full scope of your Canadian, US and US Canada cross-border tax filing needs.
OFFICEVancouver
12752 28th Ave, Surrey, BC, V4A 2P4
OFFICEEdmonton
104–4220 98 St NW Edmonton AB, T6E 6A1

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