The Canada Revenue Agency (CRA) is reminding Canadians of their tax obligations relating to the sharing economy, via a notice published on its website.
“The sharing economy is a technologically fuelled way to consume and access property and services,” the CRA said. “In this economy, communities pool, loan, and share their resources through networks of trust.”
Five key sectors
The CRA lists the five key sectors of the sharing economy as being: accommodation sharing, ride sharing, music and video streaming, online staffing, and peer/crowd funding. The CRA says the sharing economy is becoming bigger part of the general economy, and that it is cooperating with industries, provinces, and territories on how tax systems and compliance is affected by such changes.
The CRA says tax obligations for individuals or small businesses involved in the sharing economy mean they have to report all income earned through such activities, as well as meet goods and services tax/harmonized sales tax requirements.
Fines, penalties, or even jail time
“If you underreport or do not report your sales or income, you are participating in the underground economy and this could result in serious consequences. If you get caught evading tax, you may face fines, penalties, or even jail time, in addition to paying the taxes owing on unreported amounts,” warns the CRA.
To correct their tax affairs and declare income that they did not report in previous years, Canadians have several options, explains the CRA. Details are available at How to change your return. In some cases, tax-payers may qualify to use the Voluntary Disclosures Program.