Many have reversed their planned under-reporting to avoid getting caught out
The size of the Canadian gig economy has grown over recent years and now incorporates around 7.4 million people. But until now, there has been temptation for some to under-report what they earn.
While taking on a side hustle might seem a smart move to offset the cost of living, not declaring all of the income generated is not so smart. But a year ago, around three quarters of gig workers who took part in a poll revealed they would not declare all – or in some cases any – of their earnings.
But things changed late last year with Ottawa’s legislation requiring gig platforms must report users’ income to the Canada Revenue Agency.
An updated poll by H&R Block Canada reveals that 71% of those that had planned to keep quiet about their gig income had changed their minds. However, more than one third of respondents said they are still inclined not to be entirely honest.
"In light of the new federal legislation, the CRA is able to compare what gig workers report their income to be from digital platforms against what the digital platform reports on their behalf," said Yannick Lemay, a tax expert at H&R Block Canada. "Despite this, many Canadians still appear tempted not to declare all their gig-related income, which carries significant risks and is breaking the law. The good news is that there are a multitude of tax benefits and credits that gig workers can claim to put money back in their pockets."
The firm’s research found that 90% of gig workers report it being a side hustle generating extra income while 10% make all of their income from this work. On average, 24% of Canadian gig workers’ income is from gig work.
But many workers were unaware of the legislation affecting income reporting, while 37% said they were not certain of the tax implications of their gig work.
"For the most part, gig workers are essentially classified as self-employed for tax purposes," said Lemay. "However, unlike more traditional self-employed Canadians, gig workers often receive T4A slips from their gig platforms. There are also nuances in the expenses and deductions that gig workers can claim, which are specific to the type of gig work they do."
The study also discovered that 65% of respondents worry that 2025 is going to be a tough financial year for them, with half saying that despite making a good salary they struggle to make ends meet for everyday expenses.
