[Canada] Tax rules for income earned on OnlyFans

[Canada] Tax rules for income earned on OnlyFans
13 Jan 2023

Canadian OnlyFans content creators must report all income that they earn on the platform and keep up to date with their tax obligations. Wealth Awesome summarises the key things creators need to know.

OnlyFans has more than 60 million users worldwide and is home to over 750,000 content creators. Many of these creators use the UK-based streaming platform as a primary or secondary source of income.

Do OnlyFans creators have to pay taxes in Canada?

OnlyFans allows users to share free content, however, the vast majority of creators on the platform use the streaming service to generate income by:

  • Selling pictures, videos, and content packages
  • Receiving tips while performing live
  • Charging for one-on-one chats

 

Anyone on OnlyFans who isn’t earning income as a content creator need not worry about taxes. However, if you’re earning money from the platform (no matter how little), you must pay your taxes.

The CRA recently began cracking down on social media influencers and online content creators who hadn’t filed their taxes or properly reported their income. In addition to OnlyFans, the CRA has been keeping close track of high-profile accounts on:

  • Twitch
  • YouTube
  • Instagram
  • Twitter
  • TikTok

 

These are all apps that allow creators to earn money from affiliate marketing commissions, brand partnerships, tips and even permit them to sell products and services.

As the majority of OnlyFans creators are sex workers, the platform has become a lucrative source of income and some creators earn well in excess of $100,000 per year.

Initially, it was reportedly a challenge for the CRA to track online income obtained from social media and streaming platforms because these platforms don’t require users to register for a business. Many users mistakenly believe that they don’t have to pay taxes since their account isn’t an official business.

In addition, many of the users on these platforms are younger influencers - between 18 and 25 - who may not be familiar with Canadian tax laws.

This wrong assumption has resulted in many content creators being required to pay back taxes to the CRA.

OnlyFans taxes in Canada: what creators need to pay

OnlyFans creators who are earning revenue from their content are required to pay the same taxes as any other self-employed small business owner in Canada, including:

  • Business income tax
  • GST/HST sales tax
  • Personal income tax (if you pay yourself as an employee of your business)

Business Income Tax

Most OnlyFans creators in Canada reportedly operate as a sole proprietorship; a company structure with a single business owner. As a sole proprietor, you should report all of the income that your OnlyFans account earns, deduct your eligible expenses and pay a percentage of the sum to the CRA as self-employed business taxes.

The federal tax rate you will pay depends on how much money your business earns. The more money your business earns, the greater taxes you’ll be required to pay. The current federal tax rate for self-employed businesses in Canada is as follows:

  • 15 per cent on the first $50,197 of net income
  • 20.5 per cent on the amount between $50,197 and $100,392
  • 26 per cent on the amount between $100,392 and $155,625
  • 29 per cent on the amount between $155,625 and $221,708
  • 33 per cent on the amount over $221,708

If your OnlyFans page earned $100,000, for example, you would pay 15 per cent on the first $50,197 and then an increased tax rate of 20.5 per cent on the remaining $49,803.

GST/HST Sales Tax

Provincial Sales Taxes (PST) are levied on goods and services sold within each Canadian province. The federal government charges its own additional 5 per cent federal GST.

Some provinces reportedly require businesses to pay separate provincial and federal GST taxes, while others have combined their provincial sales tax with the federal GST to create a single Harmonized Sales Tax (HST).

Christopher Liew has summarised the GST/HST tax rates within each Canadian province and territory for Wealth Awesome below:

Province/Territory

Sales Tax Type

Provincial Sales Tax (PST)

Federal Goods and Services Tax (GST)

Harmonized Sales Tax (HST)

Total Sales Tax

Alberta

GST Only

None

5%

N/A

5%

British Columbia

GST/PST

7%

5%

N/A

12%

Manitoba

GST/PST

7%

5%

N/A

12%

New Brunswick

HST

N/A

N/A

15%

15%

Newfoundland and Labrador

HST

N/A

N/A

15%

15%

Northwest Territories

GST Only

N/A

5%

N/A

5%

Nova Scotia

HST

N/A

N/A

15%

15%

Nunavut

GST Only

N/A

5%

N/A

5%

Ontario

HST

N/A

N/A

13%

13%

Prince Edward Island

HST

N/A

N/A

15%

15%

Quebec

GST/PST

9.975%

5%

N/A

14.975%

Saskatchewan

GST/PST

6%

5%

N/A

11%

Yukon

GST Only

N/A

5%

N/A

5%

 

Tax deadline for OnlyFans creators in Canada

If you’re a self-employed content creator in Canada, you must file your small business tax returns no later than June 15, the late filing deadline. Self-employed businesses that do not file for an extension are required to file for and pay their taxes by April 30. 

Should you fail to file for an extension and file/pay after the April 30 tax deadline, the CRA will begin charging interest on the amount that you owe. Interest compounds daily and can quickly add up, making it in the creators’ best interest to pay as soon as possible.

If an OnlyFans business has been registered as a corporation, you will reportedly have until the last day of June (six months after the business year ends) to file.


Source: Wealth Awesome

(Links via original reporting)

Canadian OnlyFans content creators must report all income that they earn on the platform and keep up to date with their tax obligations. Wealth Awesome summarises the key things creators need to know.

OnlyFans has more than 60 million users worldwide and is home to over 750,000 content creators. Many of these creators use the UK-based streaming platform as a primary or secondary source of income.

Do OnlyFans creators have to pay taxes in Canada?

OnlyFans allows users to share free content, however, the vast majority of creators on the platform use the streaming service to generate income by:

  • Selling pictures, videos, and content packages
  • Receiving tips while performing live
  • Charging for one-on-one chats

 

Anyone on OnlyFans who isn’t earning income as a content creator need not worry about taxes. However, if you’re earning money from the platform (no matter how little), you must pay your taxes.

The CRA recently began cracking down on social media influencers and online content creators who hadn’t filed their taxes or properly reported their income. In addition to OnlyFans, the CRA has been keeping close track of high-profile accounts on:

  • Twitch
  • YouTube
  • Instagram
  • Twitter
  • TikTok

 

These are all apps that allow creators to earn money from affiliate marketing commissions, brand partnerships, tips and even permit them to sell products and services.

As the majority of OnlyFans creators are sex workers, the platform has become a lucrative source of income and some creators earn well in excess of $100,000 per year.

Initially, it was reportedly a challenge for the CRA to track online income obtained from social media and streaming platforms because these platforms don’t require users to register for a business. Many users mistakenly believe that they don’t have to pay taxes since their account isn’t an official business.

In addition, many of the users on these platforms are younger influencers - between 18 and 25 - who may not be familiar with Canadian tax laws.

This wrong assumption has resulted in many content creators being required to pay back taxes to the CRA.

OnlyFans taxes in Canada: what creators need to pay

OnlyFans creators who are earning revenue from their content are required to pay the same taxes as any other self-employed small business owner in Canada, including:

  • Business income tax
  • GST/HST sales tax
  • Personal income tax (if you pay yourself as an employee of your business)

Business Income Tax

Most OnlyFans creators in Canada reportedly operate as a sole proprietorship; a company structure with a single business owner. As a sole proprietor, you should report all of the income that your OnlyFans account earns, deduct your eligible expenses and pay a percentage of the sum to the CRA as self-employed business taxes.

The federal tax rate you will pay depends on how much money your business earns. The more money your business earns, the greater taxes you’ll be required to pay. The current federal tax rate for self-employed businesses in Canada is as follows:

  • 15 per cent on the first $50,197 of net income
  • 20.5 per cent on the amount between $50,197 and $100,392
  • 26 per cent on the amount between $100,392 and $155,625
  • 29 per cent on the amount between $155,625 and $221,708
  • 33 per cent on the amount over $221,708

If your OnlyFans page earned $100,000, for example, you would pay 15 per cent on the first $50,197 and then an increased tax rate of 20.5 per cent on the remaining $49,803.

GST/HST Sales Tax

Provincial Sales Taxes (PST) are levied on goods and services sold within each Canadian province. The federal government charges its own additional 5 per cent federal GST.

Some provinces reportedly require businesses to pay separate provincial and federal GST taxes, while others have combined their provincial sales tax with the federal GST to create a single Harmonized Sales Tax (HST).

Christopher Liew has summarised the GST/HST tax rates within each Canadian province and territory for Wealth Awesome below:

Province/Territory

Sales Tax Type

Provincial Sales Tax (PST)

Federal Goods and Services Tax (GST)

Harmonized Sales Tax (HST)

Total Sales Tax

Alberta

GST Only

None

5%

N/A

5%

British Columbia

GST/PST

7%

5%

N/A

12%

Manitoba

GST/PST

7%

5%

N/A

12%

New Brunswick

HST

N/A

N/A

15%

15%

Newfoundland and Labrador

HST

N/A

N/A

15%

15%

Northwest Territories

GST Only

N/A

5%

N/A

5%

Nova Scotia

HST

N/A

N/A

15%

15%

Nunavut

GST Only

N/A

5%

N/A

5%

Ontario

HST

N/A

N/A

13%

13%

Prince Edward Island

HST

N/A

N/A

15%

15%

Quebec

GST/PST

9.975%

5%

N/A

14.975%

Saskatchewan

GST/PST

6%

5%

N/A

11%

Yukon

GST Only

N/A

5%

N/A

5%

 

Tax deadline for OnlyFans creators in Canada

If you’re a self-employed content creator in Canada, you must file your small business tax returns no later than June 15, the late filing deadline. Self-employed businesses that do not file for an extension are required to file for and pay their taxes by April 30. 

Should you fail to file for an extension and file/pay after the April 30 tax deadline, the CRA will begin charging interest on the amount that you owe. Interest compounds daily and can quickly add up, making it in the creators’ best interest to pay as soon as possible.

If an OnlyFans business has been registered as a corporation, you will reportedly have until the last day of June (six months after the business year ends) to file.


Source: Wealth Awesome

(Links via original reporting)