Canadians - ? about freelance and claiming for taxes

[m00nwater]

I've been searching the Canadian Tax website with no results, so I thought some Canadians in here might be able to answer some questions for me.

1. Is there a minimum amount earned through freelance work before you have to claim for taxes? I was under the impression that you have to earn a certain dollar amount before you have to bother claiming it for tax purposes. Is this a correct assessment, or should you be claiming everything you earn?

2. Does it matter what kind of work is earning you this revenue (ie: graphic design freelance work plus something like home maintenance on the side, painting houses, or something like that.) and is it all lumped in as "freelance work", no matter what kind of employment it is?

Thanks in advance to anyone that can steer me in the proper direction. I understand that I could find an accountant to answer these questions, but I don't know any personally, I file my own taxes every year and have received my return already, so these questions are not relevant to this year's tax return.

[MikeHun]

Fellow Hoser Eh!

1. $30,000 is min income to Revenue Canada terms and considers it a "hobby" business or part time business. Check with them to see what rates are to be sure!

Very important To cunduct business you will need vendors permit.
Fact is you need to get a GST registration number also to charge tax on your business service before you can claim income as self employed or sole proprietor!

Also Ont. provincial tax if you are reselling
ie: Print, exhibits, hardware or sub contractors through you or that you contract out. R.G.D. ( Registered Graphic Designer ONT. ) is representing GD's for tax Ont. Provincial laws. there si a grey area where GD's don't know what to charge there services to. The current Ont. Provincial laws are ambiguous.


http://www.rgdontario.com/


2. The business designation is ambiguous and at the same time all encompassing . Really you are an entrepreneur, you could specialize in one or the other. I myself can do Architectural Illustration / models which takes CNC and woodworking experience also and includes Web design, print design, photography, Admin, Bill collector on site off site head bottle washer and etc. ;)
Note
If what you do as home maintenance goes and there are registered trades you definitely need a license to practice ie: electrician, architect engineer etc.


3. Also pay for a good accountant that knows small entrepreneurial business tax exceptions and the like.

I've been searching the Canadian Tax website with no results, so I thought some Canadians in here might be able to answer some questions for me.

1. Is there a minimum amount earned through freelance work before you have to claim for taxes? I was under the impression that you have to earn a certain dollar amount before you have to bother claiming it for tax purposes. Is this a correct assessment, or should you be claiming everything you earn?

2. Does it matter what kind of work is earning you this revenue (ie: graphic design freelance work plus something like home maintenance on the side, painting houses, or something like that.) and is it all lumped in as "freelance work", no matter what kind of employment it is?

Thanks in advance to anyone that can steer me in the proper direction. I understand that I could find an accountant to answer these questions, but I don't know any personally, I file my own taxes every year and have received my return already, so these questions are not relevant to this year's tax return.

[m00nwater]

Thanks a lot for giving me some direction.

So if you earn LESS than $30000 in a year it is a hobby and doesn't have to be claimed for tax purposes? I don't think I'm reading that right.

[Broacher]

The 30k is the kick-in limit for PST collection.

'Hobby' income is considered by the tax guys to be business income, even if you do not think so. "Any activity that you do for profit" is their definition. They don't care how little you sell, by the way.

This means you have to complete the T2124 (Statement of Business Activities) which comes in the general tax package.

And you thought you could get away from them that easy? Ha ha ha.

Seriously, anyone who claims a miscellaneous income coming close to that PST income is probably waving a big red flag to the auditor squad.

[MikeHun]

Always claim and collect taxes unless there is an exemption number!!!

I don't know about hobby designation I make more than 30K
but I think it's just a bureaucratic reason to tax small business's no
matter how small/big three ways till tuesday Go to the RGD website I had in the link about PST collection. It's pertainent and applies there is a grey area as I said the tax law has to be clear.

[m00nwater]

OK, thank you guys so much. And no, I didn't think I would be "getting away with anything" (like the gov't would let me do that!), I just had the impression that a certain amount earned is exempt. I guess I was wrong.

So it is still uncertain if it makes a difference if the work is creative freelance and manual labour work? I will peruse the RGD stuff when I get an opportune moment to sit and really soak it all in.

Thanks again.

[MikeHun]

One last thing.

If you full time at a design job as an Employee you are covered under labour laws... tax laws for that employment designation included.

If you freelance that is the extra income as a self employed, big difference.

[Broacher]

If someone gave me proof that someone was doing graphic design 'as a hobby' and pocketing tax free income, I wouldn't hesitate to report them. If it's income, it's income. Pay the taxes like everyone else. And especially, like me-- the guy who claims his measley $32 saving account interest income every year.

What don't I report? Charity work. Technically, you're supposed to. You are generating taxable value. If I give away graphic design services to a good cause and they offer me a receipt I refuse. Why? Because I then have to report the value of that work as income. And even with a receipt as a record for charitable donation, the tax 'savings' doesn't cover the taxes I'd have to pay on the income value that I should report.

So technically, I'm illegally avoiding taxes. Not that I do tons of charity work, but I figure if they want to take me to court on any of them, let 'em try.

[MikeHun]

What springfield are you from Broacher?
I thought Homer and Marge were Neighbours, he he he
Didn't know Canadian tax law extend to Springfield also. ; )
And yeah charities not a fan myself of the current tax situation.

[m00nwater]

Well, I am basically trying to avoid an audit, not avoid paying taxes I should be. I don't want to have to claim something that isn't necessary, that is all.

My situation is different because I am also a referee for a sport, and we sort of have a situation where the gov't "looks the other way" lest they open a can of worms with a bunch of other things involved with grassroots sports.

I have a full time job, plus I have some freelance clients, I referee, plus I do some house renovations. My main question is whether or not income from a non-creative field is lumped into that income as well for an Ontario resident.

[MikeHun]

You have a multi stream income, keep all documents receipts for each and your good to go. You'll get audited even with only one source of freelance income sooner or later, as long as you can prove it's all a legitimate source.
I also claim expense in the freelance operation thereof ie computers, software, gas don't forget those deductions.

[m00nwater]

OK, thanks so much. I think I will look for professional assistance to get me going until I understand this all!