Keeping track of revenue records and expenses are among the biggest challenges for gig workers when filing their taxes, which could be hindering some of them from filing this tax season.
“I would suggest that there will be an uptick for tax service providers and bookkeepers to help gig workers keep accurate records,” said Dino Infanti, partner and national leader at KPMG LLP Canada.
He said gig workers are more akin to self-employed workers, which adds complexity when understanding what expenses can be deducted compared with traditional employees.
The Canadian gig economy isn’t small.
A March 5 survey by H&R Block Canada Inc. showed that 7.4 million Canadians are part of the gig economy, with 23 per cent of Canadians having been a part of the gig economy at some point. This includes anything from freelancing to delivery and ride-hailing services.
However, 30 per cent of the 1,790 people surveyed nationwide didn’t plan to report all gig income this tax season.
To counter this, new legislation known as Bill C-47 came into effect Jan. 1, 2024, to enforce tax obligations among gig workers using digital platforms. The bill requires platforms like Uber Technologies Inc. (NYSE:UBER) and Airbnb Inc. (NASDAQ:ABNB) to share income information to the Canada Revenue Agency on behalf of workers.
These new regulations will make it easier for the CRA to match and compare what might have been reported by the worker, said Infanti.
Complexities for gig workers don’t end there, as making over $30,000 over four quarters would place workers in the GST-HST indirect tax regime, he said.
“There's other elements beyond income tax that a gig worker should be mindful of,” said Infanti.
But Vancouver Uber driver Kamal Sharma said filing taxes has been simplified, as his platform provides monthly statements detailing income and other fees.
“Everything is detailed in that, and even the GST collected,” said Sharma. “After the year ends, they send an annual statement with all the mileage accrued … it's very simple.”
Sharma, who’s been working in the ride-hailing business since 2020, said there aren’t those many expenses to keep track of – about 10 for him.
He said this includes items like car loans, gas or electricity consumption, tire changes, commercial inspections, police verifications and vehicle service.
But Sharma suspects some workers were still not reporting their full incomes prior to Bill C-47 coming into effect.
“They have to do it now, the whole record has to be sent,” he said.
According to the H&R survey, 66 per cent of respondents said they were still not aware of the new rules from Bill C-47, but 71 per cent of them reported becoming more inclined to declare their income after becoming aware.
However, 36 per cent of respondents said they were still not inclined to report all income.
