Here are some blogging tax deductions in Canada to remember, when it comes tax time. Starting a monetized blog may seem easy when you read those posts on “How to Start a Profitable Blog” with the Bluehost affiliate link, but in actual fact, it takes a lot of work, effort, and patience in order to be profitable. It’s not passive income per se. If you start earning income from your Canadian personal finance blog, for example, you will have to start reporting it on your Canada Revenue Agency (CRA) Income Taxes.
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Blogging Tax Deductions in Canada
Even if you hire an accountant (and I am not an accountant so I recommend that you consult one if you have business income and want to verify these deductions) you will still need to know what deductions are available to you when you are collecting and reviewing your receipts during the year.
Make sure you save your receipts, keep track of your transactions, keep a list of all your income and sources of income, and keeping proof (whether it is digital or physical) of your transactions. You’ll need back up for the figures and numbers that you are reporting, even if it is many years down the road when CRA requests an audit.
Reporting your Blogging or INfluencer income
If you have a blog, if you are a Youtuber, or are an influencer or even have a podcast (and get paid via sponsorships of product or with monetary means) you have to report your income to the CRA.
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 of the first amount you failed to report.
Imagine if 10 year old Ryan Kaji from that Ryan’s Toy Review Youtube channel lived in Canada and failed to report his annual $29+ million income (it just blows my mind how he has made so much money since he was 3 years old). He’s one of the highest paid Youtube stars, according to Moneywise.
Blippi is also up there, earning over $17 million for 2019-2020 from Youtube.
This is not just for bloggers, if you make money via any social media as a content creator such as TikTok, YouTube, Instagram, Twitch, Facebook, and Twitter, you should be reporting your income to the CRA.
The CRA has a task force of 60 people focused on looking for influencers and content creators not reporting their income.
Even if you get paid out $110.23 for the whole year by Adsense, you will have to report your business income as a sole proprietor.
If you start your blog for example, and you don’t have any income yet, you can still deduct your expenses incurred.
You start your business (or entrepreneurship) with the intention of profit or a monetized blog.
Note: This is different from a hobby blog, if the intention of your hobby blog is not to earn money from it.
Here are some examples of income from your blog business that you would have to report to the CRA:
- Subscription fees to your channel(s) or if you have a newsletter that people subscribe to (and pay for)
- Display advertising
- Brand partnerships or Sponsorships (even if it is non-monetary)
- Merchandise sales
- Gifts (for example, if you receive makeup as a make up blogger, or if you receive a mattress to review, you will have to declare the fair market value of these goods on your income)
- Tips (for example the “Buy me a Coffee” or the “Patreon” subscription or even the Twitter Tips feature which I’m not sure if it is still active)
- Referral codes or Affiliate Income
Blog, Youtube, and Podcast Sole Proprietorship
When you have income to report, you are automatically considered as a sole proprietorship and your income is considered self-employment income. This is even if you have a regular job that pays you a paycheque.
If you have a sole proprietorship, you could fill out the form T2125: Statement of Business or Professional Activities to be able to claim expenses against your income on your personal tax return.
In fact, the CRA asks that you share the income-generating websites that you own on the statement of business activities tax form.
T2125 under Part 2- Internet Business Activities.
The nice thing as a sole proprietor is that your business losses can be offset against your employment income, and you will receive a personal tax refund because of the business loss. Or the business loss from your self employment business can also be carried back to reduce your taxable income in any of the prior three years, or it can also be carried forward for up to 20 years.
However, if you have multiple years where your blog is not monetized and continued (or increasing) expenses incurred, this will likely raise the CRA’s eyebrows and trigger an audit for your blogging tax deductions in Canada.
Also, if you have business use of home expenses, you cannot use these to create a business loss, but it can be carried forward to future years to claim.
If your business is a corporation, you would file a T2 corporate tax return instead. Corporate taxes is beyond the scope of this blog post.
Blog Tax Deductions in Canada
Here are 14 blogging tax deductions in Canada, or if you earn money through the aforementioned social media platforms, here are some of the deductions you could consider.
You’ll want to increase your tax deductions because it will reduce the income tax that you have to pay to the CRA.
In a very simplistic example, if you made $10,000 in income and your expenses were a total of $3000 for the year, then you would only have to pay taxes on the $7000 for the year, and not the $10,000.
You’ll want to look at the T2125 Tax form for these business expenses.
The industry code is 711513 “Independent Writers and Authors” which encompasses
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.
Eligible Influencer or Blogging Business Expenses
Here are some ‘unique to blogging’ or social media influencer type of expenses that would be different from other small businesses in Canada, for example, like running a daycare. These can be deducted from your self employment income. Some of these can be under Office Expenses in the T2125 form.
- Domain name
- Web hosting or WordPress Hosting
- Blog templates or blog design fees
- Online tools and subscriptions
- Email marketing for email subscriber acquisition (like ConvertKit or Mailchimp)
- Apps used to run your business
- Payment for freelancing writer services or services rendered to help with your WordPress
- If you have a food blog or restaurant blog and you review restaurants this could be considered ordinary and necessary for business and thus it could be deducted at 100% instead of 50%.
If you buy prizes or share products hat you have, that you give away to gain subscribers or to advertise, you can deduct these expenses as advertising costs.
Same goes for if you buy gift cards, for example and run a giveaway on Instagram.
An annual Tailwind App fee or Canva Pro fee also applies to advertising costs as it is marketing for Instagram and Pinterest.
If you pay for ads (Facebook ads?) this also can be deducted as advertising costs.
Liability insurance can be tax deductible for your business if you pay for this.
Capital Cost Depreciation
Blogging tax deductions in Canada also includes physical items.
“Hardware” equipment such as a new computer, a smart phone (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.
Capital Cost Allowance (CCA) classes are determined by CRA and there’s a set percentage that you can deduct over the equipment’s life span. It continues to depreciate per year until it goes to $0 on your tax return.
Software that you use like Adobe Photoshop is also deducted in this manner (over a period of years).
Here is a list of the CCA classes and rates by the Canada Revenue Agency.
Some relevant CCA’s for bloggers are social media influencers for example are:
- Laptops, iPads, printers, iPhones (e.g. if you upgrade to the new iPhone this year) are considered Class 50 (55% CCA per year is deducted)
- Computer furniture, appliances, or other fixtures is considered Class 8 (20% CCA per year)
There is an Accelerated Investment Incentive until 2023 where you can apply 1.5x the CCA.
Legal, accounting and other professional fees
Legal, accounting, and other professional fees can be deducted too.
For example, accounting fees to prepare and file your income tax and GST/HST returns (if you have sales of $30,000 CAD in a year (not just calendar year), you are required to collect GST/HST for your services).
Fees for a professional bookkeeper to keep your accounting organized can also be deducted. Or if you have legal fees involved.
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 to 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 labour costs (e.g. your time).
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.
Bank Charges (Management and Administration Fees)
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.
Even Paysimply fees when you pay your CRA taxes with a credit card.
Food, Beverages, and Entertainment Expenses
50% of food, beverages, and entertainment expenses (for example, if you get a Starbucks Coffee while you blog, you can claim that) if these expenses are for the purpose of earning income from a business or property.
In addition, for example, a restaurant gift certificate is also considered to be an expense for food and 50% of the value can be used for a tax deduction.
If 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.
Delivery, Freight, and Express
If you have a PO box rental or if you mail book giveaways as part of your promotions (or have other mailing costs), you can deduct these costs under delivery, freight, and express in the T2125 form.
Office Stationery and Supplies
“Disposable” or “small” office expenses such as paper, pens, paper clips, note pads, and stamps can be deducted.
Even if you get these from Dollarama, keep track of your receipts!
Prepaid expenses can be deducted but they kind of operate like the Capital Cost Allowance.
For example, if you prepay for your web hosting for two years, only the current year’s can be deducted, and you will be able to deduct the remaining 50% for the following year.
Property Taxes, Rent, Mortgage Interest
Property taxes (business at home expenses, basically the proportion of your property taxes on your working space/ total living space can be used for tax deduction).
Even if you pay your property taxes on your Canadian Tire Mastercard and get Canadian Tire Cashback, you can still deduct the proportion for business use vs home.
If you pay mortgage interest, you can deduct the proportion that you use for business vs home.
Similarly, if you rent, you can deduct your rent for your business taxes (proportion of working space/total living space). Make sure you have a copy of your lease agreement and monthly rent receipts in case the CRA performs an audit.
Telephone and Utilities
These are all prorated to the amount you use for business vs personal use.
For example, for Internet, if you spend 2 hours of the day blogging (2 hours/ 24 hours of the day) and 1 hour of the day tweeting to promote your blog then you can deduct about 12.5% of your annual Internet costs.
Obviously if you spend more time per day on your blog business you can deduct more.
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.
For example, the FinCon conference in the United States is a popular one for personal finance bloggers, though attendance has been reduced recently due to COVID.
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 were part of the gig economy and drove for Uber Eats or Uber or 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.
Hopefully this post about blogging tax deductions in Canada was helpful for you.
As mentioned, I am not an accountant, this is not considered professional advice, and I recommend that you consult an accountant for information and advice related to your new small business, even if you use a free tax return program in Canada.
Are there any blogging tax deductions in Canada that I may have missed?
GYM is a 30 something millennial interested in achieving financial freedom through disciplined saving, dividend and ETF investing, and living a minimalist lifestyle. Before you go, check out my recommendations page of financial tools I use to save and invest money. Don’t forget to subscribe for blog updates, a free dividend yield spreadsheet, and the free Young Money Bootcamp eCourse.