The Price of Fame: GST/HST Implications for Canadian Social Media Influencers

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The CRA’s crackdown on ‘platform economy’ includes sales tax

The past few years have seen the rise of a new type of celebrity: the social media influencer. Whether on Twitch, Instagram, YouTube, TikTok, or yes – even OnlyFans, Canadian influencers are certainly making a name for themselves on social media, both in rapidly growing follower counts and revenue earned through online platforms.

Typically, anyone conducting business in Canada and making taxable supplies as part of that business is obligated to register for GST/HST under the normal GST/HST regime. For social media influencers living in Canada, whether you are earning in cash or kind, this includes you.

Are there any exceptions to the GST/HST rule?

There are two exceptions that may apply:

An influencer who qualifies as a “small supplier” is not required to register for GST/HST under the normal regime. A small supplier is generally defined as a person who makes less than $30,000 of taxable supplies annually (over four consecutive calendar quarters). An influencer would be required to register for GST/HST and start charging the tax when they cease to qualify as a small supplier. Bear in mind that an influencer, when running their business as an individual (different from operating through a corporation, for instance), would not need to register unless they have a a reasonable expectation of profit from their business activities.
An influencer who is a non-resident of Canada and who does not carry on business in Canada is also not required to register under the normal regime (however, a non-resident influencer may, alternatively be required to register for GST/HST purposes under the simplified regime for non-residents). We will address the requirements applicable under the simplified regime for non-residents in a separate article.

It is important to note that a “business” for GST/HST purposes is not limited to conventional active businesses that provide goods and services. A business also includes passive-type of income-generating activities that are engaged in on a regular or continuous basis that involve the supply of property by way of lease, license or similar arrangement. For example, an influencer earning royalties by granting a platform or user access to their digital content would be considered engaged in business, even if no additional services are offered by the influencer.

The Next Steps

Once the influencer becomes a GST/HST registrant under the normal regime, they must:

Register for GST/HST with the Canada Revenue Agency
Start charging and collecting the GST/HST as required on their taxable supplies
File GST/HST returns and remit the tax collected on their revenues net of GST/HST payable on their expenses
Keep books and records for all their business transactions

The GST/HST registered influencer will have to determine which GST/HST rate must be charged on their taxable supplies. When the recipient of the supply made by the influencer is a Canadian resident, the influencer would generally be required to charge GST/HST at a rate that varies from 5 per cent to 15 per cent, depending on the province or territory where the supply is deemed to be made. When the recipient of the supply made by the influencer is a non-resident of Canada, the tax rate would generally be 0 per cent (i.e., the supply would be a “zero-rated” supply), subject to any other applicable conditions and restrictions. A review of all the relevant facts will generally be required to determine whether the taxable supply is taxable and at what rate.

In many cases, the Canadian influencer will earn their revenue from the users through a distribution platform operator. It is crucial to note that those distribution platform operators are not required to charge and collect GST/HST on behalf of the influencer when the influencer is a resident of Canada. The obligation to charge and collect tax falls on the influencer if the influencer is required to be registered under the normal GST/HST regime. It is therefore imperative that the influencer notifies the operator as soon as they become GST/HST registered so that the operator can start collecting the GST/HST on behalf of the influencer and remits the tax collected back to the influencer in a timely manner, including all the information needed by the influencer to prepare and file his or her GST/HST return and remit the tax collected by the due date for each reporting period.

It may also be possible for the influencer to enter into an arrangement to have the distribution platform operator reports the GST/HST collected on behalf of the influencer on the GST/HST return of the operator.

Wondering if you’ve got everything covered?

Consulting with a business management and tax professional up front will help you optimize and manage the business-side of your social media career, which will ensure any CRA action is mitigated. A skilled team of experienced professionals can relieve you of these urgent financial concerns, while you focus on fostering your passion for creating engaging content and strengthen relationships with your audience.

This article has been prepared for the general information of our clients. Please note that this publication should not be considered a substitute for personalized advice related to your situation.

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