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I am sorry if this topic has been discussed before.

How can a service provider file a tax return and declare income.

What are the steps, and legal issues?

Thanks for all info.

Newboy

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Use tax prep software such as TurboTax and file as self employed.

 

The trickiest part is determining the industry code to use to describe the work you do.

 

Here's a good link to help with that:  

https://turbotax.intuit.ca/tips/industry-code-must-self-employed-filers-8168

 

Essentially you'll need to browse through this list:

https://www23.statcan.gc.ca/imdb/p3VD.pl?Function=getVD&TVD=1181553

 

And find a code combination that matches the services you offer.

 

Just find something close.  This might be good to use?  https://www23.statcan.gc.ca/imdb/p3VD.pl?Function=getVD&TVD=1181553&CVD=1182718&CPV=711511&CST=01012017&CLV=5&MLV=5

 

In the end, it's good to pick something close.  It's more for categorization than anything else.

 

Then you'll need to self report your income.  Be as accurate as you can.  You can also claim some expenses, including a portion of your living space that is used primarily for your self employment.

 

Then you will need to pay what you owe, which will be income tax, and if you want to be eligible for Canada Pension when you retire, you'll also have to pay for that. Both as an employer and employee.

 

Expect combined tax and CPP to be 30-40% of your declared income.

 

Here's a guide:

 

https://turbotax.intuit.ca/tips/guidelines-for-reporting-self-employment-income-6387

 

As for legal issues, correct me if I'm wrong, but I believe sex work is currently legal in most if not all of Canada.  As part of filing, you dont have to declare "I'm a sex worker" , thats what the industry code is.  

 

The big one is be prepared to defend your income you are declaring.  Have some sort of "proof" about it in the off chance that you get audited.

 

In the end, the CRA wants people to report accurately.  And beyond that, they want people to report income.  The taxes fund all the services we as Canadians get to enjoy.  They generally dont audit people willy nilly, they tend to audit when people are reporting something outrageous, like 30k in income, with 25k of expenses including living in a $3k/month apartment.  Those together don't jive and sound hinky. 

 

 

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I will follow up with OldandNerdy's points. 

 

There is a code to put on that basically the government or an accountant will understand. I placed 'Life Coach' in the occupational space. 

If you travel, host incall in a hotel, and dine out keep all the receipts. Most, if not all of it can be written off. Food is allowed 15(ish)%. So I keep all, every single time I go out, receipts. Double check with an accountant, you are able to write off 100% of a gift card, i.e Tim's or the ultimate dining card. 

I put condom, lubes, toys in office supplies. Lol 🤣 it's what we need to do to run our buisness day to day. Along with the rest of the normal office supplies. 

Clothing can be a tough one, as it can't be demeed something we can wear normally. I put lingerie in but I've held back dresses, skirts and other items like that. 

If you use your home, figure out the % of the home used to host. That translate to the % of bills you can write off, interest on a mortgage, or the total rent. If you have a couple of large spaces, that you aren't sure about, like the kitchen or living room, have a conversation on the couch, or take a trip to the island with a client. 😜😘

Car can be another big one, depending if you tour a lot or not. Count your milage from your office to destination. Again it works to a % of total drive kms. Which then a % of gas, maintenance, insurance and interest of car payment can be written off or if the car is a lease, the car payment. 

 

If you need more details and silly questions, you are welcome to DM me. This will be my 2nd full year filing. I can try and help out or direct you to someone that will know more information. 

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