I finally finished doing my taxes (looking forward to a whopping refund of $1147- wish there was more, but beggars can’t be choosers, now can they?) and I thought I would share with you some tax tips for those working at home. Back in 2009, I shared some last minute tax tips, and this post will talk about work-at-home expenses for your own business, specifically.
The CRA views income earned through blogging as a business (with you as the sole proprietor of the business if you are not incorporating your blog business), and this amount get added onto your regular income as your total gross income for the tax year, and it gets taxed at your marginal tax rate (unless you incorporate your blogging business). You would use form T2125- Statement of Business or Professional Activities.
2010 was a good year- I have finally started to make some income off my blog. 2009 was a negative year, the $3.42 income for December’s 2009 Google Adsense (ha!) didn’t even get paid out, so I was able to subtract my business expenses of my blog from my regular full time income. Namely, I took advantage of the 100% Capital Cost Allocation for computers (class 52) and got a nice discount on my beloved MacBook Pro courtesy of the tax man (this goodness unfortunately ended in February 2011- so if you bought a computer, keep the receipt!). This however, can’t of course be done consistently as CRA will smell something fishy and assume you’re not actually running a business.
The Canada Revenue Agency understands that all businesses might not get off to a good start and be profitable, but you will eventually have to be making money somehow in a year or two, otherwise that might trigger the tax man’s suspicions, and you might smell an audit coming. If you’re planning on expanding, you may find that you need to compare Canadian accounting software deals and upgrade to a more robust product that’s better suited to corporations.