Hobby or Business? Declaring Income in Canada

In today's digital landscape, what was once a hobby can easily become a budding business thanks to the ability to sell products and services online. Platforms like eBay, Amazon, and Etsy have made it easier than ever to monetize your passions, but as Canadian residents venturing into retailing crafts, food, or personalized goods online, it's important to understand tax obligations.

How the CRA Determines Hobby vs. Business

When it comes to declaring income in Canada, the Canada Revenue Agency (CRA) takes an interest in how you categorize your activities: as a hobby or a business. The crucial difference lies in the issue of intent.

If you’re selling items with the intention to earn a profit, the CRA is likely to categorize it as business income, taxable and liable to GST/HST. On the other hand, those who seldom sell goods or services made through their hobbies may not be liable to the same requirements.

Knowing the Tax Rules for Your Hobby and Business

Understanding the difference between a hobby and a business can be hard when you're selling stuff online as a small business or only doing it part-time. Even though making extra money is great, figuring out the tax rules and laws set by the CRA can quickly complicate the process.

Whether you intend to turn your hobby into a full-fledged business, or you are just hoping to sell a few old art prints, HWGCA is here to help you navigate all aspects of personal and professional taxes. With our decades of experience and staff of bookkeepers and CPAs, we can answer any questions you have and help you manage your finances.

Located in Surrey (Cloverdale), British Columbia, since 1971, HWG, Chartered Professional Accountants proudly helps clients throughout the Lower Mainland and across Canada.

Our team of chartered professional accountants provides helpful business and personal tax services. Our continued growth proves the success of our client relationships.