SIN - GIG economy and On line Sales in 2024, new legislation (called Bill C-47) came into effect!!

[brettjet38]

SOURCE : CRA 

https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/compliance/platform...

Taxes and the platform economy

Gig economy

 

On this page

• Understanding the gig economy
• Income tax obligations
• GST/HST obligations
• Keep records of all your transactions

 

Understanding the gig economy

The gig economy generally refers to services provided through short-term contracts, freelance work, or other temporary work that is arranged through an online platform or mobile application.

In the gig economy, gig workers operate as independent contractors and freelancers. Common platforms used in the gig economy may include, but are not limited to:

• Fiverr
• Clickworker
• Crowdsource
• Uber Eats
• Skip the Dishes

Contracted services can range from a micro-task (a small task set up through the Internet) to specialized services. Contracted services can include tasks such as:

• web development
• business consulting services
• maintenance and repairs for residential or commercial property
• legal consulting services
• graphic design services
• moving services
• writing and translation services

Depending on the gig, workers may do the work from remote locations. Online platforms and mobile applications can connect consumers and businesses with gig workers from all over the world.

 

Income tax obligations

Gig workers who are resident in Canada must report and pay tax on all self-employment income by completing line 26000 of their income tax and benefit return, as well as Form T2125, Statement of Business or Professional Activities.

• Line 26000 – Taxable income
• Form T2125, Statement of Business or Professional Activities
• How to fill in Form T2125

This applies to all income, including income earned from business done outside of Canada.

Gig workers who are not resident in Canada are subject to Canadian income tax on most Canadian-sourced income paid or credited to them during the year unless all or part of that income is exempt under a tax treaty. More information on non-residents is available at Non-Residents and Income Tax - Canada.ca.

Tax obligations on foreign income

Taxes paid on foreign income by Canadian residents could be eligible for a tax credit.

• Line 40500, Federal foreign tax credit
• Form T2209, Federal Foreign Tax Credits

If you paid income tax to more than one country and the total foreign income taxes paid to all countries was more than $200, a separate calculation is required for each country for which you claim a foreign tax credit.

Claiming expenses

You can claim eligible expenses associated with income you earned through the gig economy.

To claim expenses, you have to keep proper financial records.

Examples of eligible expenses include:

• costs from using a platform to sell services
• marketing costs to increase traffic to your website or online portfolio, if those costs are associated with earned income
• cost of materials or services within or outside of Canada, such as:
  • raw products (wood, wool, paint, beads)
  • software licences
  • editing or translation services

For more information on what qualifies as an eligible business expense on your income tax and benefit return, see Business expenses.

 

GST/HST obligations

Generally, if you earn more than $30,000 over four calendar quarters by supplying taxable goods or services, you have to register for, collect, and remit (send) the related goods and services tax / harmonized sales tax (GST/HST) to the Canada Revenue Agency.

The requirement to register for, collect, and send GST/HST for your sales and services depends on:

• the type of work you are providing
• the location of the person or business you are providing the service to

You may choose to register for and collect the GST/HST even if you earn less than $30,000. This lets you take advantage of the related input tax credits (ITCs). These credits are prorated in the same way as expenses that are deducted for income tax. For information, see “Find out if you are eligible to claims ITCs” on Input Tax Credits.

If you have taxable sales from both ridesharing services and gig economy contracts, and the total is less than $30,000 over four calendar quarters, you have to register for, collect and remit GST/HST only on the ridesharing services. However, you may choose to also collect and remit GST/HST on your gig economy contracts. If the total taxable sales are more than $30,000 over four calendar quarters, you must collect and remit (send) the GST/HST to the CRA on both services.

GST/HST information

When to register for and start charging GST/HST

General Information for GST/HST Registrants

Already registered for GST/HST?

If you are registered for the GST/HST, you may be eligible to claim Input tax credits for the GST/HST paid on purchases and expenses related to your commercial activities.

Generally, you can claim an input tax credit (ITCs) only when you have paid GST/HST (or it is payable) on expenses for your business activities. A tax professional can advise you on your tax obligations.

• Input tax credits (ITCs)
• Calculate input tax credits – ITC eligibility percentage

Keep records of all your transactions

Keep track of your income and your expenses, including sales you make to buyers in Canada and other countries.

• Business records
• Keeping records

Depending on the extent of your participation in the platform economy, additional tax considerations may apply. For more information, refer to General Information for GST/HST Registrants - Canada.ca.

[brettjet38]

SOURCE - H&R Block

https://www.newswire.ca/news-releases/canadian-gig-workers-impacted-by-changes-to-income-tax-act-jan...

Canadian Gig Workers Impacted by Changes to Income Tax Act - January 31 Reporting Deadline is Looming; Are You Compliant?

New rules require platforms to report Canadian gig workers' details and earnings –
H&R Block research indicates significant portion of gig workers could be exposed to risks by not declaring all income

CALGARY, AB, Dec. 18, 2024 /CNW/ - If you're a driver, blog writer, selling crafts on Etsy, renting out a room through Airbnb, or earning income through another type of online platform, it's critical to understand how to comply with new tax-related measures. In 2024, new legislation (called Bill C-47) came into effect, which requires gig platforms (websites and apps you use to earn income to do freelance or contract work) to share certain information with the Canada Revenue Agency (CRA) on your behalf.

This new legislation serves to address concerns among tax authorities that tax obligations are not being accurately calculated by digital platforms and that gig workers full income isn't always visible to tax administrators. Gig platform operators are now required to file an 'information return' with the CRA, which includes sharing mandatory user identifying and income-related information for all Canadian gig workers using their platform no later than January 31, 2025.

"H&R Block research indicates that in 2024 around 9 million (28%) Canadians reported being part of the gig economy, of which 32% said they were willing to risk not declaring 'any' income and 43% are willing to risk not declaring 'all' income in an attempt to pay less in taxes," said Yannick Lemay, Tax Expert, H&R Block Canada. "Not declaring all income carries significant risks and is effectively breaking the law. The new reporting rules for gig platforms require operators to provide identifiable information on their users and their related income to the CRA. If these reported amounts are not aligned with what gig workers declare through their tax filing, it could create significant red flags with the tax authority and lead to potential financial penalties. It's imperative that Canadian gig workers understand and are compliant with the new reporting requirements through Bill C-47. With the CRA's looming deadline of January 31, 2025, now is the time to act to avoid potential financial penalties."

Key Considerations Around Bill C-47 for Canadian Gig Workers:

• Bill C-47 involves amendments to Canada's Income Tax Act around 'mandatory disclosure rules': This includes what needs to be reported to the CRA, and requires gig platform operators (such as Uber, Lyft, Airbnb, Vrbo, Etsy, eBay, Poshmark, etc.) to collect and report identifying information about Canadians who use their platforms and the income they earn.
• New gig worker information reporting requirements: Gig platforms must collect and report information for every Canadian that uses the platform and share it with the CRA, including: full name, date of birth, primary address, tax identification number or TIN (for most Canadians, their authorized tax identification number is their 9-digit social insurance number (SIN), issued by Service Canada).
• New financial disclosure requirements: Platform operators must report their own financial transactions and collect information on revenues earned by Canadians who use their platforms based in Canada.
• Platform operators are required to give their gig worker users a copy of the information they provide to the CRA: This ensures gig workers are aware of what is being sent on their behalf. It's important this information aligns with the user's own records and matches what they report at tax time.
• Mandatory electronic filing: The new bill also includes several administrative changes that require taxpayers to use the CRA's electronic services rather than sending information manually. Certain tax filings and payments must be done electronically, for example for payments over $10,000 and if you are filing five or more T4 slips.
• January 31 deadline: Platform operators must file an information return with the CRA, containing the required information relating to their users, no later than January 31 of the year following the calendar year in which any Canadian is identified as a reportable user of the platform.
• Noncompliance with Bill C-47 can result in significant financial penalties: By not reporting all their income, Canadians risk facing significant penalties and interest on top of any amount owed.

"Maintaining meticulous records is imperative for gig workers to track your income closely and ensure that what the platform operator reports to the CRA aligns with your own records, noting all related expenses," said Lemay. "The good news is there are a multitude of tax benefits and credits that gig workers are entitled to, which can help maximize their refund and lower their taxes overall. While the range of expenses you can claim depends on the type of gig work you are engaged with, they can include travel, auto-related, software subscriptions, home office expenses, mobile phone and internet bills, shipping, entertaining and interest or bank charges on business loans, to name just a few."

[brettjet38]

https://dailyhive.com/vancouver/cra-tax-gig-uber-ebay

 

Make money on apps? Tax changes could affect you this month

Whether you drive for ride-sharing apps or sell items online, the Canada Revenue Agency (CRA) has implemented changes that will affect you, and they apply this month.

According to the CRA, “The gig economy generally refers to services provided through short-term contracts, freelance work, or other temporary work that is arranged through an online platform or mobile application.”

Some common platforms include Uber Eats, Skip the Dishes, and Fiverr, while common services can consist of web development, business consulting services, and writing and translation services.

New legislation came into effect last year, making it mandatory for digital platform operators to report gig workers’ information to the CRA.

“This new legislation serves to address concerns among tax authorities that tax obligations are not being accurately calculated by digital platforms and that gig workers’ full income isn’t always visible to tax administrators,” states a December 2024 release from tax preparation company H&R Block.

This means gig platform operators such as Etsy, eBay, Poshmark, Airbnb, Vrbo, and Uber must provide workers’ income-related information by January 31, 2025.

So, what kind of information will be sent to the CRA?

Platform operators must share workers’ full names, dates of birth, primary addresses, and tax identification numbers (TINs). For most Canadians, TINs are their nine-digit social insurance numbers (SIN). In turn, companies must also provide users with a copy of information shared with the CRA.

Research by H&R Block revealed that in 2024, nine million Canadians (28%) made money through gigs. Thirty-two percent of them said they were willing to risk not declaring “any” income, and 43% said that they were willing to risk not declaring “all” income so they could pay less in taxes.

Yannick Lemay, a tax expert at H&R Block Canada, warned that doing so comes with “significant risks” and is “effectively breaking the law.”

“The new reporting rules for gig platforms require operators to provide identifiable information on their users and their related income to the CRA,” he said.

“If these reported amounts are not aligned with what gig workers declare through their tax filing, it could create significant red flags with the tax authority and lead to potential financial penalties.”

[brettjet38]

"Research by H&R Block revealed that in 2024, nine million Canadians (28%) made money through gigs. Thirty-two percent of them said they were willing to risk not declaring “any” income, and 43% said that they were willing to risk not declaring “all” income so they could pay less in taxes."  that does not include all the temporary immigrants and illegal workers who use these apps to make a HIDDEN income stream while they are here using our social services.

And, this is just one reason why Bill C-47 was put in place...

All Sales are income. I gave my SIN years ago, and so should everyone else. Otherwise, you you will no longer be able to sell on any platform, app, or site and will then be in the direct sights of the CRA if you try to do so.

They are going after every weed in the country, all the G5 are, this was planned years ago and set for activation in 2025.

And do not forget Automatic Tax Returns are also on the way this year for the lowest tax bracket, so keep your receipts and expenses!

[brettjet38]

Bill C-47, the Budget Implementation Act, 2023, No. 1, was introduced in Parliament on April 20, 2023 and received royal assent on June 22, 2023. The bill implements tax measures from the 2023 federal budget and other previously announced measures. 

...et voila, here we are January 2025.

Gotta love backdoor politics...

[sin-n-dex]

---

@brettjet38 wrote:

Bill C-47, the Budget Implementation Act, 2023, No. 1, was introduced in Parliament on April 20, 2023 and received royal assent on June 22, 2023. The bill implements tax measures from the 2023 federal budget and other previously announced measures. 

...et voila, here we are January 2025.

Gotta love backdoor politics...

---

While I do admit the 30 item threshold (as one of the criteria) is pretty low considering you can do 30 items at $5-10 each selling common household things to clear up space in your basement, I will point out that those of us who've been paying our taxes for years are happy we will no longer be undercut by someone with an extra 20-25% profit margin because they aren't declaring their income.

I'm in a 25% tax bracket. I would be able to sell my stuff much cheaper and do better here if it weren't for the fact I'm reporting my income and paying taxes on it (to the tune of thousands of dollars a year at tax time).

I know it's not a popular opinion, but IMO this evens the playing field for everyone.

C.

[lotzofuniquegoodies]

---

@brettjet38 wrote:

Bill C-47, the Budget Implementation Act, 2023, No. 1, was introduced in Parliament on April 20, 2023 and received royal assent on June 22, 2023. The bill implements tax measures from the 2023 federal budget and other previously announced measures. 

...et voila, here we are January 2025.

Gotta love backdoor politics...

---

From my bunch of research on this topic the actual implementation process was delayed by what went on with the Infernal (sp) Revenue Dept in the USA.

https://www.irs.gov/newsroom/irs-announces-delay-in-form-1099-k-reporting-threshold-for-third-party-...

Like everything in eBay important info/system changes takes time to trickle down to the Canadian entity from the US entitity. (Often they never do.) This is just another wonderful example. There were announcements at the end of 2023 on dot com. (Additional updates during the year in 2024). Nada on ca.  It was mostly discovered recently by a user finding the help page on ca. If ALL sellers including the Canadian variety had advanced official warning there wouldn't be so many right now at wits end trying to make heads or tails out of this what may be a nightmarish situation for a major percentage (the occasional seller trying to make a buck or 2 to keep the lights on).

eBay should own some of the blame here. How much is up to each user!!! 

Annoucements ca Page 1       <Nada>

Announcements com Page 3       12/8/2023

[brettjet38]

@sin-n-dex 

"I know it's not a popular opinion, but IMO this evens the playing field for everyone."

I agree and it will go a very long way to weed out the scammers and frauds...

[recped]

---

@lotzofuniquegoodies wrote:

---

@brettjet38 wrote:

Bill C-47, the Budget Implementation Act, 2023, No. 1, was introduced in Parliament on April 20, 2023 and received royal assent on June 22, 2023. The bill implements tax measures from the 2023 federal budget and other previously announced measures. 

...et voila, here we are January 2025.

Gotta love backdoor politics...

---

From my bunch of research on this topic the actual implementation process was delayed by what went on with the Infernal (sp) Revenue Dept in the USA.

https://www.irs.gov/newsroom/irs-announces-delay-in-form-1099-k-reporting-threshold-for-third-party-...

Like everything in eBay important info/system changes takes time to trickle down to the Canadian entity from the US entitity. (Often they never do.) This is just another wonderful example. There were announcements at the end of 2023 on dot com. (Additional updates during the year in 2024). Nada on ca.  It was mostly discovered recently by a user finding the help page on ca. If ALL sellers including the Canadian variety had advanced official warning there wouldn't be so many right now at wits end trying to make heads or tails out of this what may be a nightmarish situation for a major percentage (the occasional seller trying to make a buck or 2 to keep the lights on).

eBay should own some of the blame here. How much is up to each user!!! 

Annoucements ca Page 1       <Nada>

Announcements com Page 3       12/8/2023

---

I don't know why you keep posting about announcements on .com

that:

A - Have nothing to do with Canada

B - Are about IRS 1099K forms issued to US Sellers

C - The first batch of 1099-K's were issued over a decade ago, first by PayPal and then by eBay for Sellers as they were moved to Managed Payments. The notices on .com from 2023 are only about the threshold changes that were just anounced by the IRS at that time.

[sin-n-dex]

---

@brettjet38 wrote:

@sin-n-dex 

"I know it's not a popular opinion, but IMO this evens the playing field for everyone."

I agree and it will go a very long way to weed out the scammers and frauds...

---

Don't get me wrong, I know specific examples of people who this new bill is going to hurt by making them declare income (when they are only barely above the threshold), and I have sympathy for people who use their gig income to make ends meet in a country where doing such a thing is difficult for many people.

When the 1099K threshold was lowered in the US, it was the greatest news ever that I wouldn't be competing with all sorts of others sellers who sold 19999 in goods and paid no taxes on their income. But that has been repealed and changed numerous times, I think it's only a lowered threshold as of 2024. (My favourite post was at the end of 2023 when they repealed the change and someone said "so I missed a whole year's worth of sales?" You should see the forum members who pay taxes jumping all over these posts.)

C.

[lotzofuniquegoodies]

@recped 

My problem is they properly & clearly advised US sellers about this coming down the pikes but couldn't be bothered to do the same for Canadians in advance.

[sin-n-dex]

---

@lotzofuniquegoodies wrote:

@recped 

My problem is they properly & clearly advised US sellers about this coming down the pikes but couldn't be bothered to do the same for Canadians in advance.

---

I understand the issue, since they're going to report our 2024 income there are things you can do to lower your threshold.

If you have dedicated space in your house/apt to do eBay stuff you can write off a percentage of expenses. You can write off things like cell phone and internet. You can write off vehicle expenses (but I'd tread carefully if you don't have the right kind of car insurance for business use... when my spouse had a car that I borrowed to do my mailings, I kept gas receipts for gas I bought for the car, but didn't claim any other expenses). I write of meals that I've paid for where we get together and talk about eBay (I get input from IRL friends on things I can do to improve sales, and sometimes it's more entertaining like talking about some customers).

It doesn't just have to be postage purchases and packing supplies. If you're doing a T2125 there are lots of categories that are acceptable to put expenses. It will lower your net and taxable income.

CRA is not as strict as the IRS with "use of home", in Canada they want to know how much of the home you need, it doesn't have to be a specific dedicated space for no other purpose. I have a place in my house where I store packing materials and a room where I keep the inventory that's stored here and work at a desk to conduct my activities.

You can write of equipment (like printers and laptops), but tread carefully there if you have home insurance with a business exclusion (or aren't telling your home insurance about your eBay sales). If your equipment starts a fire your insurance will not cover you because the equipment belongs to the business (as opposed to personal use).

Just some stuff I can share to help people caught up in this for 2024 sales unprepared. Bank statements and credit card statements will help with tracking expenses.

C.

[brettjet38 · Accepted solution]

The details.... from 01 December 2023

https://globaltaxnews.ey.com/news/2023-1975-canadas-new-reporting-rules-for-digital-platform-operato...

Canada's new reporting rules for digital platform operators take effect 1 January 2024

• Digital platform operators will need to comply with extensive new reporting requirements in the new year.
• Legislation to implement model rules developed by the OECD for digital platform operators takes effect on 1 January 2024, with the first reporting — and exchange of information by the Canada Revenue Agency with its partner jurisdictions' tax administrations — occurring in early 2025 with respect to the 2024 calendar year.
• Digital platform operators subject to these rules should review their processes and systems to ensure they are able to comply with the reporting requirements.

Legislation introduced by the Canadian government to implement model rules developed by the Organisation for Economic Co-operation and Development (OECD) for digital platform operators received Royal Assent over the summer (2023). These rules take effect on 1 January 2024, with the first reporting — and exchange of information by the Canada Revenue Agency (CRA) with its partner jurisdictions' tax administrations — occurring in early 2025 with respect to the 2024 calendar year.

Digital platform operators should determine if they are subject to these rules and, if so, review their processes and systems to assess whether they are able to comply with the reporting requirements.

This Tax Alert summarizes certain key features of the new reporting rules.

Background

On 3 July 2020, the OECD released its "Model Rules for Reporting by Platform Operators with respect to Sellers in the Sharing and Gig Economy" (the OECD model rules). In general, these rules require digital platform operators to collect information on revenues earned by sellers offering accommodation, transport and personal services through platforms and to report the information to tax authorities. The OECD indicated that it developed these rules to limit the proliferation of different domestic reporting requirements and to facilitate information exchange agreements between interested jurisdictions

In its 2022 budget, the federal government highlighted tax compliance issues associated with the increasing use of online platforms. For example, it was noted that not all platform sellers were aware of the tax implications of their online activities. Identifying noncompliance was also an issue, as digital transactions occurring on online platforms were not always visible to the CRA and other tax administrations. To address these concerns, the federal government proposed to implement the OECD model rules for reporting by digital platform operators.

On 3 November 2022, the Department of Finance released draft legislative proposals, and accompanying explanatory notes, for new reporting rules for digital platform operators. Notably, these proposals adopted the optional module to expand the scope of the OECD model rules to include the sale of goods and the rental of means of transportation. As well, the draft legislative proposals did not contain an exclusion from the reporting rules for certain platform operators, which was included in the 2022 federal budget documents. Specifically, there was no exclusion for platform operators that facilitated the provision of relevant activities for which the total consideration over the previous year was less than €1 million and that elected to be excluded from reporting.

On 22 June 2023, Bill C-47, Budget Implementation Act, 2023, No. 1, received Royal Assent. Bill C-47 enacts Part XX of the Income Tax Act (the Act), Reporting Rules for Digital Platform Operators, which implements the draft legislative proposals released on 3 November 2022, subject to minor modifications. The provisions in Part XX of the Act must be interpreted consistently with the OECD model rules unless the context requires otherwise.

Reporting platform operators

For Part XX purposes, a "platform" is any software, including all or part of a website and applications (including mobile applications) that is accessible by users and allows sellers to connect with other users for the provision of relevant services or the sale of goods. This includes platforms that facilitate the collection and payment of consideration for relevant activities, but excludes software exclusively allowing (without any further intervention) any of the following:

• Processing payments in relation to relevant activities
• Listing or advertising in relation to relevant activities
• Redirecting or transferring users to another platform

A "platform operator" includes any entity that contracts with sellers to make a platform available to sellers. In general, platform operators are "reporting platform operators" (and thereby subject to Part XX due diligence and reporting requirements) if they are resident in Canada. A reporting platform operator also includes a nonresident platform operator that facilitates the provision of relevant activities by sellers resident in Canada, or with respect to renting immovable property in Canada. A nonresident platform operator may elect to be a reporting platform operator if it is resident, incorporated or managed in a "partner jurisdiction" (i.e., a jurisdiction that has an agreement with Canada to share information collected under the OECD model rules).

"Relevant activity" means a relevant service or the sale of goods for consideration. A relevant service includes the rental of real or immovable property, the rental of a means of transport, or a personal service. A "personal service" is a service involving time- or task-based work performed by one or more individuals at the request of a user. The Department of Finance has indicated that this term encompasses a broad range of services, such as transportation and delivery services, manual labor, tutoring, copywriting, data manipulation, and clerical, legal or accounting tasks. However, it excludes a service provided by a seller pursuant to an employment relationship with the platform operator or a related entity of the operator.

A reporting platform operator does not include an excluded platform operator. An "excluded platform operator" is a platform operator that demonstrates (to the satisfaction of the minister) that its entire business model does not allow sellers to derive a profit from the consideration received for relevant services, such as ride-sharing services, or that does not have reportable sellers (e.g., large-scale hotel operators).

Reportable sellers

"Reportable sellers" are active sellers (i.e., sellers that provide relevant services or sell goods, or that have received consideration for such relevant activities during a reportable period) that are determined by a platform operator:

• To be resident in a reportable jurisdiction
• That have provided relevant services for the rental of immovable property located in a reportable jurisdiction or have received consideration in respect of such services

Certain sellers are considered to present a limited compliance risk and are excluded from the list of reportable sellers. The Act defines an "excluded seller" as:

• An entity for which more than 2,000 relevant services for the rental of immovable property are provided during a calendar year (i.e., large-scale providers of hotel accommodation)
• A governmental entity
• An entity, or related entity of the entity, the stock of which is traded regularly on an established securities market
• A seller for which the platform operator facilitated fewer than 30 relevant activities for the sale of goods and for which the total amount of consideration paid or credited did not exceed CA$2,8001 during the reportable period

Information to be reported

In accordance with section 292 of the Act, a reporting platform operator must report certain identifying information for its own business, including its name, registered office address and tax identification number (TIN). Further, an operator must collect certain information for each reportable seller that provided relevant services, rented out a means of transportation, or sold goods. Such information includes:

• Information collected in accordance with the due diligence provisions (see Due diligence requirements, below), including certain identity-related information
• Any other TIN, including the name of the jurisdiction that issued it, available to the reporting platform operator
• Any financial account identifiers (i.e., the unique identifying number or reference of the bank account or other payment account to which consideration is paid or credited)
• If different from the name of the reportable seller, the name of the holder of the financial account to which the consideration is paid or credited
• Each jurisdiction in which the reportable seller is resident
• The total consideration paid or credited during each quarter of the reportable period and the number of relevant activities for which it was paid or credited
• Any fees, commissions or taxes that the reporting platform operator charges or withholds during each quarter of the reportable period

[brettjet38]

This is the UK version of what is happening here in Canada, this in an OECD decison...

https://www.bytestart.co.uk/side-hustle-hmrc-online-platforms

Online platforms must provide HMRC with sales reports on ‘side hustle’ businesses

If you make some extra money via a ‘side hustle’ – by selling online – you should be aware that digital platforms now share information about sellers with HMRC. You might need to pay tax on any profits you make – but it depends!

Read on to find out what the new reporting rules are, and how to work out if you should be paying tax on profits you make from your online selling activities.

Scroll down for five key steps to take if you have a side hustle.

Online platforms must submit information on their sellers to HMRC

The Low Incomes Tax Reform Group says that HMRC has not sufficiently warned people who make money trading online via ‘side hustles’ that platforms such as eBay will start to notify the taxman of sellers’ incomes from January 2025.

Although nothing has changed in terms of tax rules – everyone must pay tax on undeclared earnings – HMRC will soon have more information on individuals who use platforms like Vinted, Etsy and Fiverr when the new reporting rules come into play next year.

HMRC estimates that the new reporting requirements could affect up to five million individuals (including the self-employed).

What exactly are HMRC’s new ‘side hustle’ reporting rules?

The new rules – which HMRC originally first announced in 2021 – work as follows:

• Online platforms store data about their sellers, including who they are, where they’re located, and how much sales income they generate each year.
• Digital platforms must submit data to HMRC by the end of January each year – for traders who generate sales over a certain threshold (see below).
• The platforms also have to send reports to affected traders.
• HMRC can share this data with international tax authorities.
• If your online activity constitutes a ‘trade’, you may have to pay tax on your profits via self assessment (see below).
•  

Which small businesses are affected?

Online platforms already store sales information related to all of their users. However, HMRC has adopted new OECD reporting requirements.

This means that platforms have to send HMRC data on traders who have earned more than €2,000 or had more than 30 transactions over a calendar year.

Some initial reports are due in January 2025, based on 2024 sales. However, the majority of online traders will begin receiving reports from January 2026 – based on their sales activities for 2025.

Do you have to pay tax on any ‘side hustle income you earn?

You have to pay income tax on any income that hasn’t already been taxed.

However, you also have to take into account any allowances you might be entitled to.