Do you work for companies such as Skip the dishes, Door Dash or Uber Eats? If you do, you are part of working within the Gig Economy. Gig Economy refers to a free market system in which traditional businesses hire independent contractors to perform individual tasks for them.
What you should know about working within the Gig Economy in a tax perspective:
- People simply enter the Gig community to supplement their regular income, but what is earned in this type of work must still be reported to the Canada Revenue Agency. Working with companies such as what was mentioned above do not withhold income tax from their paychecks. As a result, gig workers should consider making estimated tax payments to CRA based on what they’ve earned per paycheck. This may help avoid any installment interest/penalties and a larger tax bill at the end of the year.
- Gig workers are responsible for buying their own work-related equipment such as a car, smartphone, and computer. While some of these expenses can be deducted from taxes, keep in mind that not all can be deducted.
- As a food deliverer, they can deduct a portion of vehicle expenses that are only for business use. To know how much vehicle expense can be deduct, they must track both mileage and total vehicle expenses they incur during the year. From this information, a reasonable percentage of vehicle expense used for business could be deducted.
- Another expense that can be the deducted is the use of a personal own smartphone for business use as. Most food delivers require to have data on their phone in order to perform their job. A reasonable percentage of cellphone expense used for business could be deducted.