What taxes do I pay on what income?
I have a full-time job, but am doing a home-based hobby on the side. I pay taxes on my earnings from the full-time job - but I just started to recieve payments for my hobby, for which I invoice my "customers". Am I able to make up to a certain amount before I have to pay taxes on it? Is there a place I can find out the rate I'd pay?
Alrighty, so I don't really make enough to be self-employed. My hobby is to do freelance art and design. Hope that's enough to help anyone.
- 1 decade agoFavorite Answer
Your hobby could be additional income called, as mentioned by another person, self employment income, which is taxed regardless of the amount you make. It is taxed through the filing of your income tax return where you record the income and all the associated expenses on a T2124 (of which the net amount ends up on your T1 return). Be warned though, that if you are running a loss on your "hobby" and it is used to reduce your total taxable income, you might get audited, CRA might determine it to be just that, a hobby, and reverse the income and the claimed expenses from the return they were on. This would have the impact of increasing your taxable income for that particular year and resulting in a tax bill.
You could probably file for a couple of years running a loss if you show that you really are trying to make this a viable source of income for yourself and CRA won't give you a hard time. Once you have a number of loss years in a row, that's when they get excited.
The GST remittance thing only comes into play when you reach the $30,000 in sales figure (on a rolling four quarters basis).
Hope this helps.
- CHARLES RLv 61 decade ago
You're describing self employment income on your hobby.
Without knowing more information such as what you're selling and how much revenue you're generating, you may need to also charge GST and PST to your customers.
You'll also have the benefit of being able to deduct all legitimate expenses that go towards the hobby business.