Tax Tips for Bloggers, Vloggers, and Etsy Digital Product Sellers in Canada.
Canadian Tax Tips for filing taxes as a blogger, Vlogger, and Etsy Digital Products seller.
I finally finished doing my taxes and I thought I would share with you some tax tips for those who have a Blog, YouTube channel, Etsy Digital Printouts shop, and a full-time job.
Disclosure:
I AM NOT A PROFESSIONAL in this area – I am not an accountant, tax adviser, financial adviser, CPA, or anything like it. These are my best practices for handling the taxes in my blogging and Etsy businesses. The suggestions in this blog post should NOT be taken as any formal, official, or professional advice – if, in doubt, you should always consult a CPA for advice on your specific business.
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In this tax tips guide, I will share all of my best practices for managing blog taxes. How to file a FREE tax return as a content creator with Wealthsimple’s FREE tax filing platform. What can you deduct and where to enter it in the T2125 form?
Declaring taxes for Canadian bloggers is rarely a favorite blogging task. But it is the most important one. Nobody wants to face an audit – especially if you’re unprepared. My tax tips will help you stay on top of your tax preparation.
And don’t worry this process isn’t as painful as you imagine.
Even if you hire an accountant you will still need to know what deductions are available to you when you are collecting and reviewing your receipts during the year.
Income from your blog or Youtube
So you started blogging on the side and you’re starting to make a bit of money.
If it isn’t already pinging in the back of your mind, it should be – what happens at tax time?
If you make $100 in a year as a blogger or a content creator on social media platforms such as TikTok, YouTube, Instagram, Facebook, and Twitter, you SHOULD report your business income to the CRA as a SOLE PROPRIETOR.
Include everything!!!
It can be difficult for the self-employed, especially bloggers and vloggers, to determine what constitutes their income.
If you have a blog, Youtube, or Podcast and get paid via sponsorships of products or with monetary means, you have to report your income to the CRA as a SOLE PROPRIETOR.
If you don’t report your income for this year or even in the last three years, you may have to pay a 10% penalty for the first amount you failed to report.
As a small business owner, you must report every source of income on their tax form T2125.
- NOTE: If you start your blog for example, and you don’t have any income yet, you can still deduct your expenses incurred. However… if you are CONSISTENTLY losing money over a long period of time and you are STILL in business for yourself, this will raise red flags to the tax man.
According to CRA Social Media Influencer guidelines you can earn income from your social media activities in many ways, both monetary and non-monetary (barter transactions), including, but not limited to:
For example, instead of paying cash, many companies give bloggers and vloggers goods (e.g., free t-shirts, free makeup, matres, etc.) in exchange for a blog post or video promoting their business or products. If that’s the case with you, you need to declare the fair market value of the goods in your income as well.
BOTTOM LINE: No matter what kind of blog are you running.
- Hobby Bloggers (blogging solely for fun or as a creative outlet)
- Side Hustle Bloggers (blogging on the side of your day job to slowly grow)
- Full-Time Bloggers (blogging as your main business)
Each stage here requires a slightly different take on how to practice bookkeeping and manage your taxes, but it’s important to remember that anytime you’re making money from your blog, you’ll almost certainly have to pay taxes on that income.
- NOTE: If your business is a corporation, you would file a T2 corporate tax return instead. Corporate taxes are beyond the scope of this blog post.
My husband and I operate a blog together
If you and your husband operate a blog together and it is not an incorporated business. When you are declaring income from the blog divide it 50/50.
How to claim Etsy income on taxes in Canada
Don’t count on any financial data from Etsy to add up. It spreads its financial data across four spreadsheets, some sorted earlier to later, some the other way. One sheet has the refunds, and the other has sale data.
It’s a frikken nightmare.
- I have instead opted to take a who-cares-what-Etsy-charges-for-sale-transaction-cost approach. On my budgeting/bookkeeping spreadsheet, I have one tab that lists every deposit made to my account from Etsy. THIS IS YOUR ETSY INCOME.
It is REALY all I care about.
- NOTE OF COUTION: Any cost that occurred before the transaction is an expense – the listing and ETSY ADS for example. The transaction fees are IRRELEVANT NOW because I am only reporting the deposit as income, which has already removed those fees so I DON’T CLAIN THEM AGAIN.
RELATED: What Does Etsy Remit to Canadian Tax Authorities?
💖 ANY OTHER TIPS/UPDATES/CHANGES FROM FELLOW BLOGGERS OR ACCOUNTANTS? Please Let me know in the comments. 💖
What can you write off as expenses as a blogger, Vlogger, or Etsy digital product seller in Canada?
Tax deductions are items or expenses that you can remove from your taxable income. This can substantially lower your taxes.
This expense will vary depending on the type of blog or vlog you run. If your content is related to travel or cooking, you can deduct expenses incurred in connection with those topics.
Here are some deductions you can take off from your income as a blogger, influencer, vlogger, or Etsy digital product seller (for other products it will be more complicated) in Canada.
BOTTOM LINE: If you’re blogging for a living, whether as a primary occupation or a side hustle, you’re running a small business. Since your blog is a business, you need to treat it like one. That means taking taxes seriously, and part of doing that is using every tax deduction available to minimize your tax liability.
Let’s break down all the expenses
Domain & Web Hosting Expenses
You can deduct expenses for obtaining a domain name. In addition, any expenses incurred for web hosting such as the annual fee paid for maintaining the domain name are also deductible as these are necessary expenses for maintaining a website.
- And it goes under ADVERTISING
If you prepay for your web hosting for two years, only 50% will be deducted for the current year, and you will be able to deduct the remaining 50% for the following year.
Canva, Photoshop, Editing apps, etc.
Think of it this way. You use Canva, Photoshop (monthly subscription), stock photo licenses, video library subscription, and any premium editing apps on your phone to create graphics, and thumbnails to advertise your services, blog posts, and videos.
- Expenses go under ADVERTISING
MUSIC subscriptions can go to advertising, but I put it under OFFICE STATIONERY ANS SUPPLIES
Internet and Cell phone Service Charges
Since an internet connection and cell phone are necessary to run your business the monthly service charges are tax-deductible. However, only the portion used for business purposes is deductible. Personal usage should be excluded from the expense deducted.
Blogging and other Social Media presence require you to be in regular touch with your followers. And of cause, you use the Internet to upload videos, write and post blogs, etc. Usually, bloggers claim 50% of the internet and cell phone service charges.
- It goes under UTILITIES
Stationery & Other Office Supplies
Items like notebooks, printer ink, highlighters, storyboards, and other stationery items you purchased for your business can be deducted for tax purposes.
- It goes under OFFICE EXPENSES
Internet courses
The costs incurred to purchase an internet course related to blogging, vlogging, Etsy, etc. are deductible for tax purposes. Enter the amount under OTHER EXPENSES and then specify “Education/Training”.
- Enter it under OTHER EXPENSES and then specify what you mean like “Education/Training”
However, if you purchase a course or web hosting service and then promote it to gain an affiliate income, You should include the cost of the course in Part 3D – Cost of goods sold and gross profit under OTHER COSTS and affiliate income add to your Business income.
Promotion Expense
Expenses incurred on promoting the blog are deductible. These could include giveaway gifts you purchased, Pinterest or/and Facebook ads expenses, and most other advertising or promotion-related expenses.
- It goes under ADVERTISING
Legal and Accounting Fees
For example, you receive notices from another blogger regarding copyright and have to pay for legal counseling. Also if you are paying for an accountant to do monthly bookkeeping, these expenses are tax-deductible. Purchasing a legal pack for your business goes in this category also.
- It goes under PROFESSIONAL FEES (INCLUDES LEGAL AND ACCOUNTING FEES)
Paying a one-time fee for help to file your taxes or register a corporation.
- It goes under BUSINESS TAXES, LICENCES, and MEMBERSHIPS
BANK CHARGES
Bank charges to manage your business, such as those for processing payments (for example if you have to pay Paypal fees when you get paid via Paypal, you can include those fees).
If you have a business bank account in Canada you can deduct these bank fees.
Credit card annual fees for your business credit card can also be deducted.
- It goes under MANAGEMENT AND ADMINISTRATION FEES
PO box rental
If you have a PO box rental or if you mail out giveaways as part of your promotions (or have other mailing costs), you can deduct these costs under DELIVERY, FREIGHT, AND EXPENCES.
MEALS
For meals and entertainment, you can only claim 50%. Consider that if you’re at a business dinner with yourself and another party, the other party’s portion is the deductible portion whereas yours is not.
FOR EXAMPLE:
– You buy Starbucks coffee while working on your blog in the cafe.
– There are sporting or hockey or other events that you take clients out to (in the name of promoting your business) you can deduct 50% of the cost.
– If the sole purpose of your blog is to review restaurants, then those expenses would be deducted at 100%.
– If you don’t review restaurants regularly, but happen to eat at one and review it on your blog, you CAN NOT deduct the expense.
- It goes under MEALS AND ENTERTAINMENT
If you use BBQ for your “food blog” recipes, you can deduct gas tank under FUEL COSTS (except for motor vehicles)
Travel Expense
Travel (such as public transportation costs, hotel accommodations, and 50% of meals) if the purpose of travel was to earn business income can also be deducted.
One more thing, if you have a car and you use it for your business (though I don’t see how a car would be useful for a blog or Instagram or social media business unless you drove for Uber Eats or Uber for example), you can deduct the proportion of expenses (gas, car insurance, car replacement insurance, parking, car maintenance, CCA for the car, etc.) you use for business vs pleasure.
- It goes under TRAVEL EXPENCES
If you’re a travel blogger, you may be able to deduct the cost of travel-related expenses. That includes transportation and accommodations at destinations that are the subject of your blog content. It is best to consult your tax professional regarding the taxation of your travel blogging business expenses.
The CRA is well aware that business-related travel often has a dual purpose: there’s a business purpose and a personal one. You’ll need to make that distinction before claiming travel-related expenses.
FOR EXAMPLE, You travel to New York to write a series of articles on that destination. If you go on the trip by yourself, and only for a few days, you may be able to deduct the entire cost of the trip. If you go for a week or more, and also bring your family, that will represent a dual-purpose trip. In that case, you may only be able to deduct the cost of your personal airfare and a percentage allocation of the hotel accommodations.
Travel related-expenses must be in proportion to the income you earn. If your blog earned $2,000 for the year, but you spent $10,000 in travel-related expenses, you’re heading for an audit.
- As mentioned, I am not an accountant, so this is not considered professional advice, and I recommend that you consult an accountant for information and advice related to your new small business.
MAINTENANCE AND REPAIRS RELATED TO WORKSPACE IN YOUR HOME
Maintenance and repairs related to business use of home expenses in Canada can also be deducted.
FOR EXAMPLE: If you needed to hire a plumber for your home (and you do your work at home). Or if you had to replace your gutters. However, it doesn’t include your own estimated labor costs (e.g. your time).
- TAX TIPS: MAINTENANCE is 100% deductible if the maintenance was RELATED DIRECTLY to YOUR OFFICE AREA (for example, if you had to repair the floors in your office).
Cleaning materials are also included with this. Even if you are buying your cleaning supplies from Dollarama, you should keep track of it.
- It goes under REPAIRS AND MAINTENANCE
Photography props
This is a bit of a grey area since photography props are both inexpensive and long-lived. In case any of your props cost more than $500 it will be treated as capital cost (see rules below).
- It will go under OFFICE STATIONERY AND SUPPLIES
YOU MAY LIKE: Top Tax Deductions for Photographers
Rent studio space for product photography
FOR EXAMPLE, You decided to rent a studio to do a professional photoshoot for your blog.
Your expenses will include
| Expenses | T2125 Part 4 Expenses |
|---|---|
| Travel expenses to and from the shoot | Travel expenses |
| Studio hourly rate | Rent |
| Hire a professional photographer | Professional fees |
| Eating lunch during the shoot | Meals (deducted at 50%) |
Purchase an item for review
The costs incurred to purchase a printer for the sole purpose to review it on your blog or video can be deducted under OFFICE STATIONERY AND SUPPLIES in the T2125 tax form.
That is if your blog is about reviewing printers and it’s not one time article.
TAX TIPS: However, if you sell this printer on Facebook Market please, for example, after. You need to claim the disposition as income.
CAPITAL COST DEPRECIATION
Blogging tax deductions in Canada also include physical items.
Computer, Mobile Phone, Laptops, Notebooks, Camera, Office table, and/or Any Hardware and Software Expenses.
“Hardware” equipment such as a new computer, or a smartphone (for example an iPhone) can be deducted. However, you have to calculate the capital depreciation of the items because it depreciates over time and cannot be claimed just in the year of purchase. As these items depreciate you will have to calculate the value of these items ‘worth’ over the years until it goes to $0 on your tax return.
Capital costs are deductible for tax purposes based on CRA-prescribed percentages each year. These capital items are grouped into Capital Cost Allowance (CCA) classes each has a set percentage that ensures that the equipment is deducted over its useful life rather than just in the year of purchase. However, REMEMBER to KEEP THE RECEIPTS as taxmen may ask to validate the tax claim.
| EQUIPMENT | CCA CLASS | RATE |
|---|---|---|
| Tools costing $500 or more – Cameras – Video Recording Equipment – Office furniture – Fax machine | Class 8 | 20 % per year is deducted |
| – Computer software like Quick Books, Turbo Tax, one-time payment Photoshop, or Microsoft operating system – China, cutlery, linen, and uniforms | Class 12 | 100 % per year is deducted |
| – Laptop – iPads, iPhones | Class 50 | 55 % per year is deducted |
“Interestingly every accountant I’ve spoken to says to ignore CCA unless you’re INCORPORATED or claiming a VERY EXPENSIVE purchase. For normal home business purchases like desks, computers, phones, printers, or the like they recommend just claiming the fill cost in the purchase year as an expense (it goes into OFFICE STATIONERY AND SUPPLIES). And if you do decide to go the CCA route, remember there is currently an exemption to the half-year rule.”
💖 ANY OTHER TIPS/UPDATES/CHANGES FROM FELLOW BLOGGERS OR ACCOUNTANTS? Please Let me know in the comments. 💖
Business-use-of-home expenses
You can use a portion of the rent that you pay, or if you own your own home, you can deduct things like the proportion of property taxes, mortgage interest, home insurance, utilities, etc.
This is what the CRA has to say about how to calculate the amount you can deduct:
“If you use part of your home for both your business and personal living, calculate how many hours in the day you use the rooms for your business, and then divide that amount by 24 hours. Multiply the result by the business part of your total home expenses. This will give you the household cost you can deduct. If you run the business for only part of the week or year, reduce your claim accordingly.“
Percentage of Time Calculation:
If out of the 24 hours you spent 8 of them blogging (7 days a week!!!) then 8/24 will be 33.33%.
If you spend 2 hours of the day blogging (2 hours/ 24 hours of the day) and 1 hour of the day posting on social media to promote your blog then you can deduct about 12.5%.
WealthSimple will calculate the proper amount you can deduct.
Just enter how many rooms you have in your house/apartment and how many you use for the business. Also enter the percentage of time you use this room for business, as calculated above.
WHAT IF I PAY RENT?
If you pay rent, you can deduct part of that rent instead which goes under MORTGAGE INTEREST. Make sure you have a copy of your lease agreement and monthly rent receipts in case the CRA performs an audit.
Things like Water or Complex Maintenance Fee will go under OTHER EXPENSES.
- But not anything related to things like your telephone bill, cellphone bill, or Internet because you do not need any of those bills to run an actual home unlike heat, electricity, water, etc.
💖 ANY OTHER TIPS/UPDATES/CHANGES FROM FELLOW BLOGGERS OR ACCOUNTANTS? Please Let me know in the comments. 💖
TAX TIPS
– You may be able to expense items before you earn money
– When determining if you’re eligible to expense an item is necessary as part of your business
– Don’t get caught up in the trap of “I can write it off”
– You have until June 15th to file these taxes, but I prefer to do them sooner because if you owe money, you have to pay by April 30th.
– If you own in income taxes payable more than $3,000.00 two years in a row. Next year you will NEED to pay your income taxes in quarterly installments.
– You do not need to register for business sales taxes either if you make under $30,000 gross if you are a sole proprietorship over 4 consecutive calendar quarters (a year).
Declare your income and expenses on T2125 as a Blogger and Etsy Digital Products Seller
In Canada, you declare any income on a T1 General Tax Return (bloggers or not). You report your blogging AND personal income on the same T1 tax form. You do not need two separate ones.
You also need to file a T2125 to state your business.
If you have more than one business, you need to file SEPARATE T2125 forms.
For example, if you have an Etsy Digital Products shop and a Blog, you need TWO separate forms.
Completing two separate T2125 forms for two types of businesses when both businesses are being operated under my own legal name.
I am currently operating two businesses; each with a different product/service and a different industry code to identify the type of business (Blog and Etsy Digital Products shop).
Both of these businesses are sole proprietorships and do not have a registered business name, so all business activity is being conducted under my own legal name.
- BEST PRACTISES: For your own recordkeeping purposes, you might want to consider making a slight change to the name of one business (not required but it’s much easier to have different names if you ever need to remit info to CRA). (for example “John Smith”, and “John R. Smith”)
If you have overlapping expenses between your Blog and Etsy shop choose only one T2125 form to enter it.
For example, I use Canva mostly for Etsy and entered it into the Etsy T2125 form and the rest of the expenses including business-use-of-home entered into my BLOG T2125 expenses.
How to fill out the t2125 form with WealthSimple for FREE
Part 2 – Internet business activities. You can find this section in Other at WealthSimple.
From CRA – Enter the number of web pages and websites your business earns income from.
Enter the address(es) of your page(s) and site(s) in the fields provided. If you have more than five sites, enter the addresses of those generating the most Internet income.
If you don’t have a website but you have created a profile or other page describing your business on blogs, auctions, marketplace, or any other portal or directory site(s), then enter the address(es) of the page(s) if they generate income. For example URL of your Etsy Digital Product Shop.
Enter the percentage of Internet-generated income. If you do not know the exact percentage, provide an estimate.
Naomi Wilking did a great job showing how she fill the “T2125 on Wealthsimple Tax (formerly Simple Tax)“ tax form in VIDEO as a small home base bookkeeping business with BLOG expenses. It’s all the information you need to file TAX this year yourself for FREE.
NAICS code for Bloggers, Vloggers, and Etsy Digital Products sellers.
You need to put the NAICS code (North American Industry Classification System) in a T2125 tax form.
NAICS code for bloggers is 711513
NAICS code for bloggers is 711513 – Independent writers and authors.
This Canadian industry comprises independent individuals (freelance) primarily engaged in creating artistic and cultural literary works, technical writing, or copywriting. Independent print journalists are included.
NAICS code for Etsy digital products seller is 323120
NAICS code for Etsy digital products seller is 323120 – Support activities for printing.
This code is difficult to identify. The category name isn’t entirely intuitive, which makes searching difficult. If you are looking for a code that relates to what you are making, you’ll likely be under “31-33 Manufacturing”.
NAICS code for vloggers and Youtube video production is 512110 – Motion Picture and Video Industries
NAICS code for Vloggers and Youtube video production is 512110 – Motion Picture and Video Industries.
Motion picture and video production. This industry comprises establishments primarily engaged in producing, or producing and distributing, motion pictures, videos, and television programs.
Frequently Asked Questions
Best Bookkeeping Practices for Canadian Bloggers
Keep all receipts
Make sure you save your receipts, keep track of your transactions, keep a list of all your income and sources of income, and keep digital proof of your transactions.
- NOTE: Get into the habit of writing on your receipts, what it was for, who you were with, what type of expense, and the total amount. You will need to prove to the CRA auditor that it’s an actual business expense and heat-sensitive paper is easily erased with time. Scan all physical receipts, it’s easier to file everything in one spot and it will be easier to email to CRA if needed later.
You’ll need a backup for the figures and numbers that you are reporting, even if it is many years down the road (up to 7 years) when CRA requests an audit.
CREATE A SPREADSHEET DOCUMENT
You can use Excel or a Google spreadsheet doc. This will help you keep track of your income and expenses. There are a ton of templates online.
- RESOURCE: Last year, I used Avalons’s Free Bookkeeping Google Spreadsheet (you don’t need to provide an email to download) with a step-by-step video guide on how to do your bookkeeping with our Google Sheet bookkeeping template.
This will help you to really create a working document that you can continue to grow and use for the future. It also allows you to keep each year separate.
- NOTE: Track your expenses when they occur, NOT when you pay them.
ORGANIZE YOUR RECEIPTS BY CATEGORY
During the year or at the end organize your receipts by what type of expense it was.
For example, all the meal receipts go together, all the office supplies receipts go together, all the electronics receipts go together, etc.
See on the left my file organization. (I will fix all spelling mistakes this year :) I promise.)
Keep a vehicle mileage log
If you are planning to claim fuel as an expense, you must keep track of your starting year odometer reading and the end of the year odometer reading, and have a travel long for all the driving you did for business.
RESOURCE: Best Mileage Tracker Apps
💖 ANY OTHER TIPS/UPDATES/CHANGES FROM FELLOW BLOGGERS OR ACCOUNTANTS? Please Let me know in the comments. 💖
Resources used to write this post
- 14 BLOGGING TAX DEDUCTIONS IN CANADA (YOU SHOULDN’T FORGET)
- TAX TIME: WHAT CAN FOOD BLOGGERS EXPENSE?
- Tax Deductions All Bloggers Should Be Making
- HOW TO DECLARE YOUR INCOME AND EXPENSES AS A BLOGGER (CANADA)
