Using Personal Assets to Make Money? CRA is On It?

Evelyn Jacks

Trading goods and services has become much more sophisticated over the years.  In particular CRA is watching social media for evidence of unreported income or capital transactions, for example, popular Airbnb rentals. They consider this new “platform economy” to include any economic and social activities that connect buyers and sellers of goods or services via mobile apps or the internet.  There are 4 platforms in particular that will be audit-prone in 2021.

1. The Sharing Economy, including Airbnb, Canada Stays, Uber and Lyft in which taxpayers use their personal assets to earn revenue.  In addition, starting in July 2021, GST must be charged on Airbnb transactions, as covered in Knowledge Bureau’s Special Report on the November 30 Economic Statement:

• As of July 1, 2021, when short-term rentals are supplied through a digital platform such as Airbnb and the property owner is not a GST registrant, the digital platform will be required to collect and remit GST/HST on the supplied accommodation.The GST/HST rate collected will depend on the location of the property being rented.
• The operators of the digital platform will be required to register for the GST, even if they are not resident in Canada, provided they facilitate short-term rentals in Canada. However, they will not be required to collect GST on the fees charged to the property owners.
• Where the property owner is registered for the GST, they would continue to be responsible for the collection and remittance of GST/HST on the short-term rental income.
• Operators of websites that simply allow property owners to list their properties for rent but do not participate in the booking of the accommodation will not be subject to these new rules.

Note that renting your property has other implications down the line.  For example, depending on business/personal usage, CRA has required the charging of GST/HST on certain real property sales.     

1. The Gig Economy.  This is short contract-based work through sits such as Clickworker, Crowdsource and Fiverr. 
2. Peer-to-Peer Selling.  This includes the selling of goods and services through Etsy, eBay and Craigslist directly between individuals.
3. Social Media/Social Influencers.  This includes the earning of advertising revenue, through subscriptions and product promotion through YouTube, Instagram, Twitch, etc.

Bottom Line:  It’s going to be very important for tax specialists to remember to quiz clients on whether they participate in these platforms and to be sure both personal tax and GST/HST reporting is correct.

These cross-over audit opportunities are the subject of Knowledge Bureau’s September 23 CE Summit.  Register early to save money on tuition; also tuition savings are possible by registering for the next 2, 3 or 4 events in advance.

Check out the agenda so far for our next two CE Summits in May and September, and come back often for updates.