Involved in the sharing economy? Know your tax obligations

What is the sharing economy?

The sharing economy is a way to consume and access property and services. In this economy, communities pool, loan, and share their resources through networks of trust, often using technology to connect.

The five key sectors of the sharing economy are:

To read more about this please visit the CRA website

Report the sale of your principal residence

If you recently sold a principal residence, you have to report the sale on your income tax and benefit return. This requirement ensures that only those entitled to the principal residence exemption can claim it. This is part of the Canada Revenue Agency's (CRA) effort to maintain the fairness and integrity of the Canadian tax system.

What is a principal residence?

A principal residence can be any of these types of housing units:

  • house
  • cottage
  • condominium
  • apartment in an apartment building
  • apartment in a duplex
  • trailer, mobile home, or houseboat

Generally, a housing unit will qualify as a principal residence if (1) you own the property alone or jointly with another person, (2) you, your spouse, your common-law partner, or any of your children lived in it at some point during the year, and (3) you designated the property as your principal residence.

You can have only one principal residence at a time. However, when you sell a principal residence and buy another (or move to another property that you own) in the same year, you can use the "plus one" rule when calculating the principal residence exemption amount. This rule allows you to claim the principal residence exemption for both properties for that year even though you can only designate one property as your principal residence.

If you were not a resident of Canada throughout any tax year during which you owned the designated property, contact the CRA. Your principal residence exemption may be reduced or eliminated based on how long you were not a resident.

What is the principal residence exemption?

When you sell a housing unit, you may realize a capital gain. However, special rules, referred to as the “principal residence exemption,” may reduce or eliminate your capital gain. If the property was solely your principal residence for every year you owned it, you may not have to pay tax on the capital gain. If the property was not your principal residence at any time when you owned it, you may have to report all or part of the capital gain.

What do you need to do to get the principal residence exemption?

You will need to report the sale of your principal residence and make the designation. You can do this by filling out the relevant sections on Schedule 3, Capital Gains (or Losses), when you file your income tax and benefit return. To claim the principal residence exemption for sales in 2017, you also have to file Form T2091(IND), Designation of a Property as a Principal Residence by an Individual (Other Than a Personal Trust), which includes certain information such as: the address of the property you sold, the date it was purchased, and the amount you sold it for. You can submit the Form T2091 electronically using EFILE and NETFILE software.

What happens if you don't report the sale?

If you forget to report the sale of your principal residence or don't make the designation, you will need to ask the CRA to amend your income tax and benefit return for the related tax year as soon as possible. The CRA may be able to accept a late designation in certain circumstances, but you may have to pay a penalty.

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Six things to remember at tax time

Six things to remember at tax time

1. Do your taxes

Even if you didn’t receive any income in 2017, you may still get a tax refund and be eligible for benefit and credit payments. You, and your spouse or common-law partner, if you have one, have to do your taxes every year so the CRA can calculate how much you could receive, and to continue receiving your benefit and credit payments without any interruptions. This includes payments such as the Canada Child benefit, the GST/HST credit and related provincial payments, the guaranteed income supplement, and advance payments of the working income tax benefit.

Beware of tax schemes that promise to reduce your taxes

What is a tax scheme?

Tax schemes are plans and arrangements that attempt to deceive taxpayers by promising to reduce the taxes they owe, either through large deductions, or through promising tax free income. Schemes can also include other creative ways to convince people to pay less than what they owe.

“Promoters” are individuals or corporations who promote or sell schemes that seek to break or bend the rules of the Canadian tax laws. These promoters deliberately make false statements to assist their clients in tax cheating, all the while obtaining a financial benefit.

Visit this CRA link for additional details Beware of Tax Schemes