The Cost of Celebrity: Goods and Services Tax (GST)/Harmonized Sales Tax (HST) Considerations for Social Media Influencers in Canada.

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The Canada Revenue Agency (CRA) has intensified its scrutiny of the ‘platform economy,’ extending its focus to include sales tax implications. Over recent years, a new breed of celebrities has emerged – the social media influencers. Whether active on platforms like Twitch, Instagram, YouTube, TikTok, or even OnlyFans, Canadian influencers are rapidly gaining prominence, marked by burgeoning follower counts and substantial earnings through online avenues.

Typically, anyone engaged in business in Canada, making taxable supplies as part of their operations, is required to register for the Goods and Services Tax (GST) or Harmonized Sales Tax (HST) under the standard regime. This obligation extends to social media influencers residing in Canada, irrespective of whether their earnings are in cash or kind.

Are there exceptions to the GST/HST rule? Two exemptions may apply:

Small Supplier Exception:

  • An influencer qualifying as a “small supplier” (generally making less than $30,000 of taxable supplies annually over four consecutive calendar quarters) is not obligated to register for GST/HST under the standard regime. However, registration becomes necessary when they cease to meet the small supplier criteria. It’s important to note that individual influencers, operating without a corporation, need not register unless they anticipate a reasonable expectation of profit from their business activities.

Non-Resident Exception:

  • An influencer who is a non-resident of Canada and does not conduct business in the country is exempt from registration under the standard regime. However, a non-resident influencer may be required to register for GST/HST under the simplified regime for non-residents, a topic to be addressed in a separate article.

Crucially, for GST/HST purposes, a “business” encompasses not only conventional active enterprises providing goods and services but also passive income-generating activities engaged in regularly or continuously, involving property supply through lease, license, or similar arrangements. For instance, an influencer earning royalties by granting platform or user access to their digital content is considered engaged in business, even without additional services.

Upon becoming a GST/HST registrant under the standard regime, influencers must:

  • Register with the Canada Revenue Agency.
  • Begin charging and collecting GST/HST on taxable supplies.
  • File GST/HST returns and remit collected tax on revenues, net of GST/HST payable on expenses.
  • Maintain books and records for all business transactions.

Determining the applicable GST/HST rate on taxable supplies is essential for registered influencers. When the recipient is a Canadian resident, the GST/HST rate varies from 5% to 15%, depending on the province or territory. For non-resident recipients, the tax rate is generally 0% (zero-rated), subject to specific conditions and restrictions.

In cases where Canadian influencers earn revenue through distribution platform operators, it’s crucial to note that these operators are not mandated to charge and collect GST/HST on behalf of the influencer if the influencer is a Canadian resident. The responsibility falls on the influencer, emphasizing the importance of prompt notification to the operator upon GST/HST registration. This ensures timely collection, remittance, and provision of necessary information for filing GST/HST returns.

Additionally, influencers may explore arrangements for distribution platform operators to report the GST/HST collected on the influencer’s behalf on the operator’s GST/HST return.

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