Sex Workers & OnlyFans CRA Taxes for Canadians
Just like any profession in the world, almost everyone has the obligation to pay taxes. The sex industry is one of the biggest industries in the world. The perennial saying “sex sells” is not incorrect and people are willing to spend a hefty amount of money to fulfill their fantasies in bed.
During the wake of the CoViD-19 pandemic, OnlyFans has become the biggest online platform for many sex workers across the globe. It has become an avenue for them to create sexual content to please their followers.
If you are interested in creating a profile on OnlyFans and you are Canadian, you should be aware of your tax obligations.
Overview of the Sex Industry in Canada
Sex work is the exchange of sexual services for goods or money. The income from this industry is considerable when compared to regular 9-5 jobs. Just like any other country, Canadian sex workers also need to understand their legal obligations to the government.
Like all residents of Canada who are earning money, Canadian sex workers have income-tax obligations. Regardless of the sex work you are involved in, such as phone-sex operators, erotic dancers, webcam models, and prostitutes, it is important for you to file an income tax return.
Moreover, if you are self-employed, then Goods and Services Tax (GST) obligations may arise. If this applies to you, then you must also register for a GST account and charge GST taxes (in addition to provincial taxes, such as Harmonized Sales Tax in Ontario).
Sex Work as a Source of Taxable Income
The term “sex worker” refers to individuals working in the sex industry to earn an income. It covers a wide range of services, which we’ll cover in greater detail below. These individuals are considered professionals in their own way and it is how they earn their income. Of course, good looks, a body to die for, and an exciting personality are important as well.
Services in the sex industry include the following:
A phone-sex operator is a type of sex worker who provides pleasure through the phone. The operator must be able to sexually stimulate his or her client through a provocative and sensual script. Phone sex may take on varied forms, such as sexual sounds, guided fantasies, and discussions of very intimate and sensitive sexual topics.
They dance to provide erotic entertainment with the goal of provoking sexual thoughts and actions and are usually clothed. Erotic dance has several categories, such as social dance, performance dance, participation dance, competitive dance, and ceremonial dance.
Whether alone or with a partner, some people get aroused with the aid of sex toys, which can range from a dildo to vibrators to oils, lotions, and to lubricants.
These dancers offer another level of pleasure when dancing. Usually, strippers, or exotic dancers, wear a small piece of clothing or are completely nude when performing on stage. Strippers also dance in a provocative or seductive manner to arouse their audience.
These types of actors are sex workers who perform different sexual acts or will role-play according to one’s fantasy. It can be soft porn or hardcore porn, which includes sexual penetration. These sex workers have some of the biggest followings on OnlyFans.
A webcam model is a video entertainer whose performance is generally streamed via the Internet to a live audience. Of course, the audience is composed of people who are paying to watch the model perform various sexual acts, including masturbation.
Many see them as the real deal because not only can they fantasize about them, but they can touch and have sex with them as well. However, there are some prostitutes who provide escort services to their clients, which includes accompanying the client to a social event but not having sex.
OnlyFans started in 2016 with the goal of helping content creators, or artists, monetize their content while simultaneously developing good relationships with their fanbase. This means that you have to subscribe to access an artist’s content.
Whether a sex worker operates legally or otherwise, one may wonder if their income is taxable. Canada does not shy away from taxing someone even if the income is earned by breaking the law. Whether you are a small-time sex worker or one who has already made a mark in the sex industry, you need to pay taxes for the earnings through your OnlyFans account.
Canadian content creators must get at least 80% of their OnlyFans revenue, while 20% is kept by the platform. When it is time to claim taxes, the creator will technically be getting the full 100%. Content creators can also claim the 20% in Line 8871, which is the Management and administration fees.
Canadian Income-Tax Implications for Self-Employed Sex Workers
As discussed earlier, even if the sex worker’s income is illegal, it is nevertheless taxable and the expenses are also deductible. When it comes to reporting income or claim expenses, the worker must file an income tax return and the deadline to file the return depends on whether the sex worker operates the business as a sole-proprietor or as a corporation.
Canadian Income-Tax Returns for an Incorporated Business in the Sex Industry
In the event that the sex worker is operating the business as a corporation, it is the responsibility of the corporation to file the T2 Corporation Income-Tax Return within 6 months from the end of the corporation’s taxation year because a corporation can have an off-calendar tax year.
The amount owed in taxes must be paid within two months after the end of the taxation year. If, however, the corporation qualifies for a small business deduction, then payment may be delayed by a month.
Safety Tips for Sex Workers in Canada
|Practice Safe Sex||Acquired immunodeficiency syndrome (AIDS) is one of the risks of being a sex worker. Practicing safe sex by using contraceptives is the best way to protect yourself.|
|Be Street Smart||For sex workers who are on the street, it is very important to prioritize their safety. Know where to go in case you don’t feel safe with your client.|
|Protect Your Identity||Some may perceive that being a sex worker is shameful. If you don’t want your family and friends to know about it, be sure to use a pseudonym and never share your personal information.|
Did you know that the CRA completes approximately 70,000 GST/HST audits every year? If you need assistance, contact Faris CPA today.
When you fill out your form T2125, which is the form in which you claim your expenses, you calculate your net income by subtracting your income from your costs.
Canadian Income-Tax Returns for a Sole-Proprietor Business in the Sex Industry
For sex workers in Canada who are operating as sole proprietors, it is important to file the Canadian T1 General Income Tax Return. It should be filed on or before the 15th of June of the following year. However, unincorporated sex workers may be exempted from filing the tax. It may differ according to the situation.
GST/HST Obligations of Self-Employed Sex Workers
As a Canadian sex worker working as a freelancer, you’ll need to register for your GST/HST number. The ones who need to register for this are freelancers who are earning at least 30,000 CAD as income for a year. After registering, the sex worker can now start charging their customers for GST/HST charges.
For those who are earning more than 30,000 CAD, the sex worker may need to register for a GST/HST number with the CRA, charge GST/HST with CRA for the services or goods provided.
Got Questions? Contact Faris CPA Today.
Not everyone has the grasp of knowledge when it comes to sex workers’ CRA taxes. If you are a Canadian citizen who is planning to enter the sex industry via OnlyFans, it is best to talk to experts first. Our proficient and experienced tax experts will be there to help you with tax problems and disputes to audit and accounting.
Sex Workers & OnlyFans CRA Taxes for Canadians FAQs
Is prostitution legal in Canada?
The answer is a bit complex. Buying sexual services is illegal, but selling sexual services is not. Nonetheless, Canada collects taxes from sex workers.
Do you have to pay taxes on OnlyFans Canada?
Yes, it is your legal duty as a resident of Canada to pay taxes to the government on your income from OnlyFans..
What are the sex workers' rights in Canada?
Just like any individual, sex workers should be treated fairly and should not be discriminated.