As more Canadians take up creative side gigs to make ends meet, a new survey suggests some may not fully understand the tax implications of having a side hustle.
The survey, conducted by H&R Block Canada, found that 44 per cent of Canadian gig workers are willing to risk the consequences of not claiming all their income this tax season as costs of living continue to rise.
“While it’s easy to think that smaller amounts may go unnoticed, by not declaring all income to the Canada Revenue Agency (CRA), Canadians face the risk of not just having to pony up for the full amount of taxes owing if they’re audited – but they’ll also be charged interest and could face substantial penalties if it’s discovered,” said Yannick Lemay, learning program lead and tax specialist for H&R Block Canada, in a press release.
For 74 per cent of Canadian gig workers, these kinds of jobs are in addition to their primary source of income, such as their full time job.
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And while the gig work industry may be growing, one in five of gig workers (23 per cent) said they don’t have a strong understanding on how this kind of income needs to be filed at tax time.
Despite the fact that failing to claim all income at tax time is considered tax evasion and is a criminal offense, nearly half indicated on the survey that they are willing to risk not claiming the income from their side hustles.
It’s a concerning statistic, considering the consequences of tax evasion could mean having to pay the full amount of taxes owing, plus interest and any civil penalties assessed by the CRA, being fined up to 200 per cent of the taxes evaded, or even running the risk of a jail term of up to five years.
“The good news is there are literally hundreds of potential deductions and expenses that can be claimed; many of which put money back into your pocket,” said Lemay.
“The gig workforce is incredibly diverse, so navigating tax-related benefits can be complex. What’s important is having a full understanding of your specific tax situation, so you don’t inadvertently leave money on the table when filing your taxes.”
The survey also found that 85 per cent of Canadians are worried their income can’t keep up with the rising inflation, and 63 per cent of gig workers flag inflation as a major motivator to pick up a gig.
In fact, in the last year there’s been a surge in those working in the gig economy. In 2023, 28 per cent said they had taken up a gig job, compared to 13 per cent in 2022.
Gig working in Canada could continue to grow as another 15 per cent of survey respondents said they are considering picking up a side hustle in the gig economy in the future due to rising inflation affecting basic costs of living such as groceries and monthly rent.
According to the Gig Economy Data Hub, gig work classifies as income-earning activities outside of standard, long-term employer-employee relationships. Examples of these jobs include construction work, Uber driving, freelance work, or dog walking.
Source: CTV News
