Updated: Dec 25, 2022
If you are a Youtuber and/or Content Creator in Canada, and you are wondering what tax write-offs you can take, this article is for you.
Before we jump into the tax write-offs, I wanted to give you some background on what expenses are deductible for tax.
There are two types of expenses: current and capital expenses. The first type of expense is “current year expenses” which basically means you have consumed and used up the benefit of that expense in the year.
This is different from “capital expenses,” which have a “lasting benefit”, which gets depreciated over its useful life. This means that you would need to deduct the cost of the capital asset over its useful life. I will be providing more examples related to this later in the video so make sure you watch until the very end.
The general rule of thumb when it comes to business expenses is for them to be TAX DEDUCTIBLE is that they need to be REASONABLE and incurred for the sole purpose of earning business income.
While this definition appears broad, the Income Tax Act, which is over 3,200 pages long with specific restrictions and limitations. For example, meals and entertainment are not fully deductible and limited to only a 50% write-off.
When it comes to Youtubers and Content Creators, it's a very unique situation in which certain expenses that may be generally perceived as personal expenses, such as clothes that are not deductible from tax, can be considered business expenses since you create content and film Youtube videos around clothing hauls and earn business income from it.
As you can assume, there can be some gray areas and each content creator is unique. Make sure to consult with your tax advisor on your specific situation, as this article is just for informational purposes only.
| Top 6 tax write-offs for Youtubers and Content Creators
Tax Write-off #1: Home Office
Many YouTubers and Content Creators primarily work from home. Did you know that you can deduct a part of your rent or mortgage as a tax write-off?
You need to have a dedicated space in your home where you film, create content, edit, respond to emails, have meetings with sponsors, etc.
You can calculate your home office expense by taking the area of the workspace divided by the total area of your home. In addition, if you use part of your home for both business and personal living, you would need to calculate how many hours in the day you use the rooms for business and divide it by 24 hours. For example, if you use a room in your home exclusively for business and it is 25% of the total size of your home, you can deduct 25% of all home-related expenses as part of your home office expense.
If you rent - you can deduct the business portion of your rent, utilities such as electricity, heat, and hydro, as well as cleaning costs such as cleaning supplies and even cleaning services.
If you own your home - you can deduct your:
Mortgage interest (but not Mortgage principal)
Utilities (such as electricity, heat, and hydro)
Cleaning costs such as cleaning supplies and even cleaning services.
Maintenance and repair
If you are working from home and renting out parts of your home like a mortgage helper, you want to be careful of overdoing it, or else you may not be eligible for the principal residence exemption.
Tax Write Off #2: Meals & Entertainment
Meals and Entertainment (M&E) are deductible when incurred to earn business income, such as meeting clients, potential clients, or in the case of Youtubers and Content Creators, Meals and Entertainment expenses that incur from collaborations, sponsorships, influencer events, etc.
However, the tax treatment is that you can only write off 50% of total Meal and Entertainment costs.
Meals include food, beverages, and alcohol, along with taxes and tip of course.
There are certain exceptions to the 50% limitation - make sure you consult with your tax advisor for specific cases where you may be eligible to write off 100% of the costs.
Entertainment expenses that are deducible are:
(a) the cost of tickets for a theatre, concert, athletic event, or other performance;
(b) the cost of private boxes at sports facilities;
(c) the cost of room rentals to provide entertainment, such as a hospitality suite;
(d) the cost of a cruise;
(e) the cost of admission to a fashion show;
(f) the cost of entertaining guests at night clubs, athletic, social, and sporting clubs and on vacation and other similar trips.
There are certain limitations, however. For one, recreational facilities, such as:
use or maintenance of property that is a yacht, a camp, a lodge or golf course, or a facility as well as
membership fees or dues of any club the main purpose of which is to provide dining, recreational, or sporting facilities
As you can imagine, businesses may have been abusing the above expenses.
Tax Write-Off #3: Travel
As a Youtuber and Content Creator, one of the perks of the “job” is to travel.
You can deduct travel expenses you incur to earn business income, such as creating content for a sponsored video. Travel expenses include:
Transportation costs such as public transportation, air, bus, train, and vehicle rental.
Accommodation such as hotels and Airbnb
Meals & Entertainment subject to the 50% limit
You might also be traveling to go to a conference, such as VidCon. When it comes to conventions, there are limitations such as being able to deduct only TWO a year. The conventions also need to meet certain conditions, such as them being
related to your business activity
held by a business or professional organization within the geographical area where the organization normally conducts its business
Now, you may have cases where you lump a business-related and personal trip into one. In this case, you may only deduct the business portion of the trip and only if the primary purpose of the trip was for business purposes (not a week-long vacation with one hour of business).
For example, if you attended a three-day business convention in Mexico, but you also decided to stay an additional two days as vacation, only costs related to three days of hotels, transportation, and meals (subject to 50%) for the business conference is deductible from your business income. However, the airfare to and from Mexico can be fully deductible, as long as the primary reason for going to Mexico was for business (not for vacation), and the cost of airfare is comparable to the airfare cost you would have incurred if you had only booked for the three-day conference trip to Mexico.
Sometimes, convention fees include the cost of food, beverages, or entertainment - in which case, M&E costs would also be subject to the 50% limitation.
Tax Write Off #4: Technology & Software
As a Youtuber and Content Creator, you have a lot of online tools, software, and apps that you may use. Any expenses that are related to your business are also tax deductible. Some costs that you may be incurred are:
Website hosting fees (Wix, WordPress, etc)
Website Domains (GoDaddy)
Video editing software (adobe premier pro, VEED)
Graphics software and tools (adobe photoshop, Canva)
Social Media management tools (Later)
For course creators (course hosting platforms such as Kajabi, and Teachables)
The thing with software subscriptions is that you sometimes prepay a year’s worth. In that case, you need to be careful of prepaid costs and prorate them accordingly. For example, if your subscription is from June 2022 to June 2023, you can only deduct half of the prepaid costs in 2022 and the remainder in 2023.
Tax Write-Off #5: Capital Expenses (ie. Equipment)
As a Youtuber and Content Creators, we need to have a lot of tech items and gadgets to film and produce content. Some capital expenses you may have incurred are:
lighting, cameras, mics, laptops, computer hardware, webcams, keyboards, mouse, cellphones, desks, and furniture for your home office, home decor for filming set up, etc.
However, these items tend to be pricier and have a “lasting benefit” where they can be used for many years.
As mentioned previously, these types of expenses are considered “Capital Expenses” and would need to be depreciated and deducted over many years. What % can be deducted every year depends on what Capital Cost Allowance or CCA Class the capital expense falls under.
Though, I do have good news for you. The Budget 2021 which was released by the Government of Canada, provides temporary immediate expensing of up to $1.5M per year. “Eligible property” acquired by a CCPC (or Canadian Controlled Private Corporation) on or after April 19, 2021, and becomes available for use before January 1, 2024, can be considered for immediate expensing and not be subject to the CCA rates.
There are some caveats where certain long-lived assets such as buildings and goodwill can’t be immediately expensed, but most capital assets would be eligible. Make sure to consult with your tax accountant.
The government is also proposing to expand eligibility for a $1.5 million temporary immediate expensing measure to unincorporated businesses, such as sole proprietors and general partnerships. This measure would be effective for investments made on or after January 1, 2022, that become available for use before 2025 (in the case of an individual or a partnership all the members of which are individuals) or before 2024 (for other partnerships).
Tax Write-Off #6: Unique expenses specific to your Content
As a Youtuber and Content Creator, you may have a niche, such as travel, gaming, fashion, makeup, etc, and have expenses unique to what you do. Certain expenses that you may incur are:
Make-up for make-up hauls and reviews.
Clothes for clothing hauls and reviews
Professional Make-up and Hair to specifically film content
Travel expenses for Travel Vlogs and Reviews
Video games & character upgrades for your gaming channel
Keep in mind that these expenses are incurred to earn business income and need to be reasonable. There is a gray area when it comes to some of these expenses and other unique expenses that are specific to what you do. Make sure you consult with your tax advisor.
| Now that you have an idea of some of the tax write-offs you can take, we covered the tip of the iceberg when it comes to becoming a business owner. As a Youtuber and Content Creator, you are considered self-employed, which comes with a host of Business Finances you need to take care of.
The next steps for you might be:
If you are a sole proprietor or general partnership, when is the best time to incorporate?
Having a proper bookkeeping system to keep track of all income and expenses.
Proactively planning for taxes to minimize your tax bill
Keeping on top of various tax compliance requirements, such as personal and business tax returns, GST/HST filings
If you are incorporated, you also need to think about how to take money out of your company in a tax-efficient way, in the form of salary or dividends.
If you want more guidance around this, click here.
Disclaimer: Note this post is not financial nor accounting/tax advice and should be used for entertainment purposes only. Consult with your own financial advisor, accountant and/or tax advisor for specific advice related to your business situation and needs.