It’s nearly April, freelancers. Which means it’s time to start thinking about preparing your tax return.
A few weeks ago, CMG Freelance ran a tax tips webinar for our members with Toronto tax specialist Sunny Widerman. To help get you into the tax filing mindset, here are a few of Widerman’s top tips from that webinar.
First of all, Widerman recommends you avoid the trap of thinking that doing your taxes is an annoyance that’s taking you away from your work: she says that spending time organizing and understanding your finances will help you run your business better.
Claiming expenses
When it comes to your tax return, self-employed people who work from home can claim a portion of certain living expenses. For renters, that will be a percentage of your utilities and rent. For owners, it’s a percentage of your utilities, property taxes, and the interest on your mortgage (but not the mortgage itself). You can also claim all or part of your internet connection and phone line — although Widerman says it’s best not to write off all of your telephone costs. Your research expenses might include cable bills if you work in television, and, for writers, any magazines and newspapers that you buy.
Filing tax returns
Although self-employed people and their partners or spouses have an extra six weeks to file their taxes – the deadline for self-employed people is June 15th – any taxes you owe are still due on April 30th. So if you file and pay on June 15th, you’ll owe some interest. However, interest is low – only about 0.5 percent per month. The penalties for filing late are higher (5 to 17 percent or even more). So make sure you file on time even if you can’t pay your bill right away.
GST and HST
Self-employed people need to start collecting GST and HST as soon as they start making $30,000 a year. You’ll be on the hook for that as soon as you cross that $30,000 mark in any given 12-month period. Widerman says you need to make sure you register for a GST or HST number as soon as you cross that line. You’ll owe GST or HST retroactively if you don’t register on time… and getting caught years later is very common. Widerman says registering is to your advantage, financially-speaking, so don’t delay if you’ve started earning over $30,000 a year.
Fraud and phishing
Finally, regarding fraud and phishing: Widerman says the CRA never sends email about your personal taxes. They don’t consider it a secure method of communication. And they’ll only phone you if they haven’t had any responses to their letters.
For more information
If you’re a CMG Freelance or CWA Associate Member, you can access the rest of Widerman’s advice in our archived webinar. There are a number of other webinars also available for members on topics such as pitching, podcasting and interactive storytelling. If you’re not sure where to access those webinars, get in touch at freelance@cmg.ca. And for information about future webinars, be sure to sign up for our members-only email listserv: The ‘Lancer.
For information about the cost and benefits of CMG Freelance membership, check out this page on the CMG Freelance website.
And if you’ve got other worries or concerns about your taxes, Sunny Widerman’s website, personaltaxadvisers.ca, is filled with resources and advice for self-employed creatives.
All the best with getting your 2015 return in on time!