Budget 2021 introduced the new Canada Recovery Hiring Program (CRHP). This new program provides eligible employers with a subsidy of up to 50 percent on the incremental remuneration paid to employees between June 6, 2021, and November 20, 2021.
Eligible employers can claim either the CRHP or the Canada Emergency Wage Subsidy (CEWS) for a particular period, but not both. The filing deadline is 180 days after the end of the qualifying period.
Eligible employers include Canadian-controlled private corporations (CCPCs), individuals, non-profit organizations, registered charities, and certain partnerships. Employers qualify for this program if they have a drop in revenue, which is to be computed the same way as it is computed for the CEWS.
Therefore, the revenue drop must be more than 0 percent for the June 6 – July 3, 2021, qualifying period. The revenue drop must be greater than 10 percent for the qualifying periods between July 4, 2021, and November 20, 2021.
All monetizing creators on YouTube, regardless of their location in the world, are required to provide tax info to Google. Google may begin withholding U.S. tax on your earnings as soon as June 2021. Google is requesting your tax information by May 31, 2021. Canada and the United States have a Tax Treaty to reduce double taxation.
Google will request a foreign TIN (taxpayer identification number) or U.S. TIN from you. Your foreign TIN is your Canadian Social Insurance Number. If you prefer, you can apply for U.S. individual taxpayer identification number by completing a Form W-7.
Click on the link for the Form-W-7: https://www.irs.gov/pub/irs-pdf/fw7.pdf If Google deducts income tax from your earnings, you should be able to claim those withholding taxes as a credit against your Canadian taxes.
Canadian residents are taxed on their worldwide income. Essentially, if you provide information or services online and earn income from it, the Canada Revenue Agency (CRA) requires you to report it on your income tax return. As a YouTuber, you are allowed the deduct the expenses that you incur to earn your income.
Top 10 YouTuber Deductible Expenses:
1. Filming Expenses
For any YouTuber, the process of video creation is going to come with costs, especially if that creator wants to publish content with higher production quality. Even if the creator films with a Cell Phone, the chances are they might progress to a dedicated camera and microphone as well as other hardware. Keep all your receipts.
2. Computer Expenses
If you invest in a computer that you use to edit and upload your content, you can claim that purchase as part of your tax-deductible expenses – if the main use of that computer is for your business.
3. Home Office Expenses
If you create or edit video content from home and have a specific area dedicated to it, then the CRA will allow you to claim a percentage of your home costs (rent, utilities) against that.
4. Cell Phone & Internet Costs
You can legitimately claim against Internet and cell phone costs – but only the business portion of the usage.
5. Business and Office Supplies
Business Supplies related to your type of YouTube business are tax-deductible. Office supplies also fall under this category so go ahead and claim that printer and ink, those folders and binder clips, that dry erase board, and that desk and chair.
6. Subcontractor Expenses
No matter how talented a video creator you are, there will be some skills you are going to need help with as part of your YouTube business. Outsource expenses like social media, costume design, and site design expenses are tax-deductible.
7. Professional Expenses
You can deduct the fees you incurred for external professional advice or services, including consulting fees. You can deduct accounting and legal fees you incur to get advice and help with keeping your records. You can also deduct fees you incur for preparing and filing your income tax and GST/HST returns.
8. Travel Expenses Related to YouTube Business
You can deduct travel expenses you incur to earn business and professional income. Travel expenses include:
public transportation fares
In most cases, the 50% limit applies to the cost of meals, beverages, and entertainment when you travel.
9. Subscription & Software Licensing Fees
If you are signed up for any subscription services or pay license fees for software or other items directly related to your business, then you can also claim these as tax-deductible.
Some examples of the type of expenses you can claim for include:
Domain name purchases and renewals
Computer/Tech insurance cover
SEO products and services
Tax and accounting software
10. Bank & Shipping Fees
You can also claim against bank fees incurred as part of running your YouTube Channel, which includes expenses like Wire transfers, or if you pay a monthly fee for a business bank account or incur PayPal charges.
You can claim up to $500 for amounts you paid in 2020 for qualifying subscription expenses. You must have paid the amounts to a qualified Canadian journalism organization (QCJO) that does not hold a license to broadcast, for a digital news subscription to content that is primarily original news. Only the individual(s) who entered into the agreement for the subscription can claim the expenses. If you and another person can claim the same qualifying subscription expenses, you can split the claim for those digital news subscription expenses. However, the total amount of your claim and the other person’s claim cannot exceed the maximum amount allowed for this credit.
Canada training credit (CTC)
You can claim the CTC for eligible tuition and other fees paid to an eligible educational institution in Canada for courses you took in 2020, or fees paid to certain bodies, in respect of an occupational, trade, or the professional examination is taken in 2020 if all of the following apply:
You were resident in Canada for all of 2020
You were at least 26 years old and less than 66 years old at the end of the year
You have a Canada training credit limit (CTCL) for 2020 on your latest notice of assessment or reassessment for 2019
You can claim up to whichever of the following is less:
Half of the fees claimed for eligible tuition fees paid to Canadian educational institutions for 2020
Your CTCL for 2020
The CTC that you claim will reduce your CTCL for future years.
Salary employees can deduct pension contributions, union dues, and professional fees, but they are very restricted in what employment expenses they can claim. Unlike individuals who run their own business, there is no general rule allowing employees to deduct any reasonable expense incurred to earn employment income. If employees are required to pay their own expenses, they can only deduct these expenses for tax purposes if their employer has signed a T2200 Form called a Declaration of Conditions of Employment allowing the employee to deduct specific expenses.
If their employer’s Declaration of Conditions of Employment allows, what other employment expenses are tax deductible?
Allowable motor vehicle expenses (including capital cost allowance)
Long-distance telephone calls
Cell phone airtime (part of)
Your assistant’s salary
Work-space-in-the-home expenses: You can deduct the part of your costs that relates to your workspaces, such as the cost of electricity, heating, and maintenance. However, you cannot deduct mortgage interest, property taxes, home insurance, or capital cost allowance.
To get the most out of your claim, always have one spouse claim all the medical expenses for the immediate family (you, your spouse, and kids under 18). It is usually better to claim the medical expenses on the lower income spouse’s return. Only expenses in excess of the lesser of $2,397 for 2020 or 3% of line 23600 net income can be claimed for the federal tax credit. Don’t forget about any private insurance premiums you pay throughout the year. Those costs may be eligible medical expenses too.
2. Moving Expenses
If you’ve relocated for work, you may be eligible to claim a wide range of moving expenses for you and your family. Some conditions apply but, generally, if you move to a home that’s at least 40 km closer to your new place of employment, you can claim associated moving costs. Commonly overlooked moving expenses are:
Travel expenses for your family including vehicle expenses, accommodations, and meals.
Fees for changing your address on documents or identification such as your driver’s license, vehicle registration, or other legal documents.
The cost of utility hookups and disconnections.
The expense of title transfer for your new home.
If you move late in the year, a portion of your moving expenses may have to wait to be claimed. Moving expense claims are limited to the income you earn at the new job that year. If you move in December, there’s not much time to use up your limit. Don’t worry, any unused moving expenses can be claimed the following year. For example, if your moving expenses totaled $10,000 but you only earned $5,000 this year at the new job, you’re limited to a $5,000 claim this year. The leftover $5,000 will be carried forward to next year.
3. Student Loan Interest
Interest paid on a student loan is an often-overlooked credit. This non-refundable credit applies to interest paid on eligible loans – not all types of loans qualify. For example, if you opened a student line of credit to fund your studies, that interest isn’t deductible. Student loan interest can be carried forward for up to five years. If you don’t need the deduction this year, consider carrying it forward.
4. Childcare Expenses
If you pay for childcare so you can work, attend school, or run your business, you already know that these expenses are tax-deductible. But did you know that other expenses also qualify? Along with the usual fees from daycares or in-home providers, most overnight camps and summer day camps are also eligible for the deduction.
5. Employment Expenses
From home office costs to tradesperson’s tools, if you incur certain expenses related to your job, you may qualify for a deduction at tax time. Be sure to obtain a signed form T2200 (Declaration of Conditions of Employment). This form, which is completed by your employer, outlines exactly what types of expenses you can claim as well as any reimbursements you’ve received.
During 2020, you may have received government COVID-19 payments such as the Canada Emergency Response Benefit (CERB), Canada Emergency Student Benefit (CESB), Canada Recovery Benefit (CRB), Canada Recovery Caregiving Benefit (CRCB), and Canada Recovery Sickness Benefit (CRSB). These amounts are taxable and you will have received a T4A tax slip.
If you are self-employed, you may have received government COVID-19 assistance for your business, such as the Canada Emergency Wage Subsidy (CEWS). Generally, you must either include these amounts in business income or reduce your expenses by the amounts that you received. You may also have received a government loan. The loan itself is not taxable, but you must include in your business income any portion of the loan that is forgivable.
If you received the Canada Recovery Benefit (CRB), you may have to repay all or part of it, if your net income after certain adjustments is more than $38,000.
Receipts are required if your small business is audited by the Canada Revenue Agency
Small businesses must keep their receipts for up to 6 years to be compliant with Canadian tax requirements. Businesses are required to provide evidence of their expenses if the CRA requests it or in case if you get audited, so it is important the receipts are organized and complete. A full CRA audit will have CRA staff visiting your office, going through your receipts, requesting additional support documents, and interviewing you and your staff with lots of questions.
Receipts help keep financial information accurate
Keeping on top of your receipts ensures that financial records are accurate, hence allowing the business to make better business decisions. The receipts also ensure that the sales tax is calculated correctly, which then ensures sales tax input tax credits are correct.
Digital receipts make this easier
We use Hubdoc (a Collection and Management Software) which organizes your digital receipts. Hubdoc integrates with QuickBooks Online (QBO) to ensure each transaction has a digital receipt attached to it. If your small business gets audited by CRA, we can efficiently respond to the audit request without (in many cases) an auditor need to visit your business premises. Digital Receipts also assist you in saving money by keeping track of receipts and eliminating manual data entry. Your information is secure, user error is avoided, and time is saved.
Receipt best practices
Receipts should always be added to Hubdoc on a timely basis by email, dragging files to upload, or uploading a photo through the Hubdoc app. If you are behind on your receipts and need assistance, please contact us. We are experts in dealing with messy financials and setting up a great receipt process so you can stay on top of your financial transactions and you can have peace of mind that it is being handled correctly.
Cloud-based accounting software seamlessly integrates with your bank accounts allowing you to track sales, expenses, and inventory. If you are updating your invoices and all the accounting information regularly, you certainly get real-time data at your disposal.
With cloud-based accounting software, you are no longer bound to your office desk for accessing financial information. Computing accounting allows you to manage your books of accounts wherever you are; that is, in the office, at home, and through multiple devices like smartphones, tablets, laptops, etc.
If you find it challenging to compile your accounting reports on your own, you can give access to your accounting information to your accountant. Cloud-based accounting software allows for multiple user access. Thus, with just a simple login, your accountant can work on the accounting reports and generate financial statements even if he is located remotely. Furthermore, cloud-based accounting also gives you control over giving access to users. For example, you can give access to limited reports to few users just in case you do not want them to have access to your complete accounting information.
Since your bank accounts are linked with your cloud-based accounting software, there is no need for you to manually enter the data. Furthermore, with computing accounting, you do not have to undertake various calculations or be careful of various accounting rules or formulas as it does it automatically for you.
Third-Party Integrations Make Accounting Easy
Cloud-based accounting software comes with third-party integrations like payroll, inventory, expenses management, etc. This gives you the flexibility to work with apps you are comfortable working with. Furthermore, there is no need for you to switch between different apps to manage various aspects of your business as you can manage the same information all in one place.
Get Time on Your Side with Automation
Cloud-based accounting software helps you automate various tasks in the accounting process. For instance, you can upload the vendor information into the accounting software and create an automatic workflow that pays the vendor automatically when the due date arises for such a payment. Likewise, you can set payment reminders and recurring invoices that automatically send invoices to customers who invoice you for the same products or services on a regular basis.
Regular Software Updates
Cloud-based accounting software releases regular software updates for security as well as the latest accounting features. Such updates make your financial data safer and give you the advantage of the new-age functionality. This saves you time and helps you take your small business to the next level.
With cloud-based accounting software, you do not need to be worried about not saving the business snapshot reports or copies of your invoices. This is because such an accounting software provides an automatic backup facility that takes the backup of your accounting data after every few minutes.
Another feature that makes cloud-based accounting software outstanding is the encryption of data. In computing accounting, you upload the financial data on the cloud where it is stored. Since you are transferring the financial data to the cloud, you would certainly want such transmission to be encrypted. Encryption rewrites your accounting information into a code.
Thus, understanding this code is out of the question for hackers or unauthorized entities who try to access your accounting information. There are different types of encryption used by cloud-based accounting service providers.
Secure Sockets Layer (SSL) is the most used encryption method which allows for the safe transferring of data from websites and browsers. Cloud-based accounting services providers use 128-bit encryption which is the same security measure used by financial institutions and banks worldwide. I highly recommend you use cloud-based accounting software. My firm has been using QuickBooks Online for several years.
The Federal Government has provided additional guidance with respect to employees deducting home office expenses for the 2020 tax year due to the COVID-19 pandemic. If an employee meets the eligibility criteria, there are now two options to calculate the deduction:
A temporary flat rate method, or
The detailed method involves using the simplified form, T2200S, Declaration of Conditions of Employment for Working at Home During COVID-19
An individual is eligible to claim a deduction for home office expenses for the period worked from home IF the following criteria are met: • The employer required the individual to work from home or the individual chose to work from home due to the COVID-19 pandemic. • The individual worked more than 50 percent of the time from home for a period of at least four consecutive weeks in 2020 due to COVID-19.
Option 1 : Temporary Flat Rate Method
The new temporary flat rate method simplifies an employee’s claim for home office expenses. Eligible individuals may claim $2 for each day worked (either full-time or part-time hours) from home in 2020 due to the COVID-19 pandemic. The maximum claim using this new method is $400 (200 working days x $2) per individual.
There is no calculation of workspace size, no requirement to keep documents to support the claim, and no requirement for a completed Form T2200, Declaration of Conditions of Employment, signed by an employer. Where multiple employees are working in the same home, each employee working from home who meets the eligibility criteria can use the temporary flat rate method to calculate their deduction for home office expenses.
Option 2 : Detailed Method
Employees with larger claims for home office expenses may instead choose to use the detailed method to calculate their home office expenses deduction in 2020. For these individuals, the Canada Revenue Agency (CRA) has created a simplified Form T2200S, a shorter version of Form T2200 that must be completed and signed by the individual’s employer. For the 2020 tax year only, the CRA will accept an electronic signature on these forms.
Employees using the detailed method will need to determine the size and use (employment and personal) of their workspace. For assistance with claiming the home office expense deduction, the CRA has created an online calculator taxpayer can access. The CRA has also expanded the list of eligible expenses that can be claimed to include home internet access fees, creating a comprehensive list for claimants. Employees must retain documents supporting the claim under this option. The CRA has also created a simplified Form T777S, Statement of Employment Expenses for Working at Home Due to COVID-19, to be used by employees to submit their claim under either option.