This is the Canadian income tax guide for OnlyFans creators earning income. We also have a U.S. income tax guide.
Disclosure: This is not official tax advice. Always perform your own research and consult with a CPA/tax expert.
OnlyFans creators will often face a rude awakening come tax time, not realizing that whether they earned $5 or $50,000, that income is taxable and needs to be reported to the CRA. While taxes for OnlyFans creators can seem daunting, by taking this first step and reading about your obligations, you’re only making the process easier on yourself. Read on for everything you need to know about taxes for OnlyFans creators in Canada.
Do OnlyFans creators have to pay taxes?
Yes. OnlyFans creators have to pay taxes on all income associated with being a creator. Income attributable to an OnlyFans business may include subscription revenues, pay-per-view sales, and tips.
Is being an OnlyFans creator considered a business?
Yes. As an OnlyFans creator, you are deemed to be carrying on a business in the eyes of the Canada Revenue Agency (CRA). Therefore, you must report all earnings associated with your OnlyFans business as gross business income. You are then entitled to various deductions to bring down your overall net income for business purposes.
A sole proprietorship is an unincorporated business that is owned by one individual. It is the simplest kind of business structure.Canada Revenue Agency
If you are a sole proprietor, you pay personal income tax on the net income generated by your business.
You may choose to register a business name or operate under your own name or both.
A common question that we get asked is “Are OnlyFans creators sole proprietors?”. In most circumstances, the answer is yes, OnlyFans creators are sole proprietors. By default, people who make money from OnlyFans will be considered a sole proprietor and will be required to report their OnlyFans income as business income.
A sole proprietorship is the most common form of business entity for independent OnlyFans creators. As a sole proprietor, your OnlyFans income is reported on your personal income tax return (T1) under form T2125 “Statement of Business or Professional Activities”.
Completing Form T2125
You may simply use your name as the business name. The NAICS (North American Industry Classification System) code 519130 “Internet Publishing and Broadcasting and Web Search Portals” should serve as an appropriate industry code for an OnlyFans creators.
Reporting Business Income
The next parts of the form require you to report your gross income received through your business. OnlyFans payout in USD, with the amount hitting your Canadian bank account being converted at the prevailing exchange rate as of the payment date. You would need to add together all of these Canadian payments received throughout the calendar year, and report the sum as total business income.
We recommend you open a separate bank account to receive OnlyFans payments to make this process easier. Also make use of spreadsheets and bookkeeping software to stay on top of your income!
Claiming Business Expenses
As a business, you are entitled to deduct expenses that you may incur to earn income from your business activities. Ensure that you keep all of your receipts associated with these expenses, in case of a CRA audit. For common business expenses as an OnlyFans creators, please see the Common Business Expenses and Deductions section below. Depreciable property such as furniture or equipment used in the course of your business cannot be fully deducted in the year in which they are purchased. Instead, the cost of these properties will be deducted over the course of several years at a rate determined by the Canada Revenue Agency, known as a Capital Cost Allowance (CCA) rate. Typical CCA rate categories are listed under the Capital Cost Allowance section below.
Common Business Expenses and Deductions
Listed below are some common business expenses that an OnlyFans creators may incur during the course of their business.
- Business use of home: if you film inside your home, have a dedicated studio space, and/or use your home as a workspace to edit and upload your videos, you can claim a portion of all of the expenses that contribute to maintaining your house – including property taxes, heat, electricity, insurance, maintenance, and mortgage interest
- Office expenses: any expenses incurred in the course of maintaining the business-side of your OnlyFans page are deductible – including pens, printer paper, and toner
- Internet: the costs you pay to your internet service provider (ISP) are deductible at the percentage used for your OnlyFans business
- Cell phone: your cell phone bill is also deductible at the percentage used for your OnlyFans business
- Professional fees: any fees associated with experts you’ve hired in the course of your OnlyFans business, either for consulting to help you get started or for a CPA you’ve hired to help with your taxes, are deductible
- Data storage & subscriptions: purchases of external hard drives or cloud storage subscriptions are deductible when used for the purpose of storing video footage; additionally, any ongoing subscriptions relevant to your OnlyFans channel, such as royalty-free music licensing services, are deductible
- Software: the purchase of professional video editing software used for OnlyFans may be completely deductible (or may be a capital asset depreciable under CCA)
- Costumes: purchases of costumes used exclusively for your OnlyFans content may be fully deductible
- Bank account and credit card fees: if you have to pay fees for your business bank account or business credit card, these may be fully deductible, as long as they are used 100% for business purchases
- Makeup and beauty products: products used exclusively for preparing yourself for your OnlyFans content may be fully deductible
Capital Cost Allowance
Depreciable property such as a building, furniture, or equipment used in the course of your business cannot be fully deducted in the year in which they are purchased. Instead, the cost of these properties will be deducted over the course of several years at a rate determined by the Canada Revenue Agency, known as a Capital Cost Allowance (CCA) rate. Listed below are a few examples of CCA categories and rates for common purchases an OnlyFans creators may make.
- Cameras and Video Recording Equipment: Class 8 (20%) costing $500 or more, otherwise Class 12 (100%)
- Photocopiers, Printers, Fax Machines, and Telephones: Class 8 (20%)
- Laptops, iPads: Class 50 (55%)
- Furniture: Class 8 (20%)
- Video Software, Accounting Software (ie. QuickBooks): Class 12 (100%)
April 30 – any balances owing due to the CRA
June 15 – T1 personal income tax return filing deadline for sole proprietors
Sales Tax (GST/HST)
You do not need to register for GST/HST if you make under $30,000 gross when you are a sole proprietor over 4 consecutive calendar quarters. However, there can be some benefit in registering before this income milestone – referred to as “voluntary registration”. As a majority of your income will be derived from non-resident corporations, such as OnlyFans, which is based in the United Kingdom, your income derived is considered “zero-rated”. Thus, you are collecting sales tax effectively at a rate of 0%, but you are still able to claim any input tax credits (ITCs), meaning you are eligible to recover the GST/HST paid or payable on your purchases and operating expenses. Sales tax returns are required to be filed annually, quarterly, or monthly, depending on the amount of income earned in a given period.
If you choose not to register, you do not charge the GST/HST (other than on certain taxable supplies of real property) and you cannot claim ITCs.Canada Revenue Agency
OnlyFans will not withhold taxes on earnings by a Canadian resident. Therefore, it is your responsibility to ensure you appropriately manage your earnings and put away sufficient funds to pay your tax bill come April. You may estimate your future tax obligation and marginal tax rate through WealthSimple’s calculator. We recommend maintaining a separate bank account, perhaps a high-interest savings account, and putting away a percentage of your earnings based on your average tax rate, each time you’re paid.
Tax Best Practices
- Find a reputable tax accountant and work with them throughout the year to ensure you meet your filing obligations and are prepared come tax season.
- Use an accounting software or find a bookkeeper (virtual bookkeepers are becoming more common) to help you keep your finances in order all year long. This reduces the burden of needing to compile and calculate all of your expenses during tax season.
- Open a separate bank account where income payments are deposited and funds for expenses will be drawn from. This ensures a hard line is drawn between personal and business activities and increases the odds of a favorable audit.
- Similarly, use a separate credit card for business purchases only to ensure clean recordkeeping.
- Take advantage of technology – use your phone to scan and create copies of all expense documentation.