I am in the process of distilling years worth of doing taxes for artists (including writers) into a simple to use journal.
SAMPLE of Canadian Authorpreneuer’s Tax Journal
Introduction, How to Use This Book 5
Definitions you need to know 7
Personal deductions vs incorporating 11
HST, Corp. Tax and Personal Tax 15
Organization tips 19
Record Keeping 23
Filing Taxes 25
Taxes as a Corporation 27
October 2017 30
November 2017 32
December 2017 34
January 2018 36
February 2018 38
March 2018 40
April 2018 42
May 2018 46
June 2018 48
July 2018 50
August 2018 52
September 2018 54
October 2018 56
November 2018 58
December 2018 60
CRA links to tax information
GIFI Codes 64
Figuring out “Use of” Expenses 66
Table of Capital Cost Allowances 68
How to use this book
This book deals with Canadian taxes only. Sorry, but I am only familiar with the taxes in my own country. While many things in here also apply to other countries, you will need to confirm tax rates, what can be claimed, etc. for your particular country. If you sell books worldwide, you may be required to submit tax returns in those countries as well, though most have a treaty with Canada that ensures that you will not be double taxed on your income. Amazon and Pronoun.com both allow you to select a tax rate of 0% if you do not live in the States. Ingraham -Spark requires you to fill out tax exemptions for all 50 states. Separately.
I use the term Authorpreneur because as a self-published or hybrid author, there is a need for you to be an entrepreneur-business person as well as an artist. This applies to artistpreneurs, too.
This book will explain a bit about how taxes for artists work, what you can claim, what you need to keep records of, etc. It has examples, and a place to write down expenses and income, and has monthly calendars, to-do lists, and space for your own notes.
At the time of writing, exact amounts for personal deductions, taxation
and marginal tax rates, etc for 2018 were not available. The will be available
on www.cra-arc.gc.ca in February 2018. You can also call 1-800-959-5525
and ask a real, live person. Eventually.
I have therefore used 2017 figures, which should not be too far off, and good for estimating your tax load. Gifi codes and Capital Cost Allowance amounts rarely change, so those figures are good to go.
I also have a section on my website (www.lauriestewart-author.com) for authorpreneurship, and will update figures and rules as CRA releases them. I am available for 1 on 1 coaching by appointment at cons or in Ottawa. Watch my blog to see where I’ll be. You can contact me through my website or on Facebook at Laurie Stewart: Writer, Film-maker, Painter.
Definitions you need to know.
Accounts Payable: This is money you owe, but have not yet paid. It can be to an editor, cover designer, printer, etc. You will move things out of this category as you pay them, and claim them as an expense. This is the Cash Method.
Or, you claim the expense when the contract is signed or the item is received, regardless if you have actually paid for it yet. This is known as the Accrual Method, as you claim income and expenses as they are accrued.
Accounts Receivable: This is money that is owed to you, that you have not yet received. Although you can do your taxes on a cash basis, be aware that CRA is talking about phasing that option out and you will be required to claim income when it is earned, not when it’s paid.
Bad Debt Deduction: A bad debt is when money that is owed to you is not paid. Generally, you claim this in the following tax year. Don’t forget to also claim back the GST/HST you paid on this income.
Capital Cost Allowance: Big ticket items cannot be written off as an expense, even if you paid cash for the whole thing. Instead, they are written off over a number of years, depending on what category they fit into. Cars are written off over several years, software over a certain price over two, under a certain amount, they can be written off the year you buy them.
Deductions: Deductions and expenses are mostly the same thing with a few notable exceptions. Use-of-Home is a deduction, even though it doesn’t cost you extra to make the spare bedroom double as an office. And the fee for a seminar can be written off entirely, but the food and drink at that seminar, only 50%.
Expenses: This is what you pay for things you need to be a writer. Desk, laptop, printer paper, business cards, 50% of the coffee you drank at a writer’s meeting, etc.
KEEP YOUR RECEIPTS! If you can’t show a receipt, you can’t claim it. I keep everything and decide on my monthly spreadsheet day whether it’s claimable.
Gifi Codes: General Index of Financial Information. These are codes which go onto your income/ expense report for CRA, and specify the group to which every expense and income amount belongs. It’s a pain, but needs to be done. I’ll have a list of the most common codes you’ll need in the appendix.
HST/ GST: A tax. You are not required to register for GST/HST until you make $30,000 from your activities as an authorpreneur. However, you cannot claim this as a tax credit prior to registering.
Income: What money you earn from any source. Speaking, ebooks, paperbacks, royalties, if you got paid, they want their share. May even include stuff that you got instead of cash, such as free airfare and hotel at a con.
Reasonable Expectation of Profit: You do not need to be making money to be considered an author. CRA requires that you have a reasonable expectation of getting paid. So you need to be writing, researching, taking classes, etc.
Use of Car: Just like it sounds, you can claim gas, parking and a portion of car payments and insurance when you use it for business purposes. A bit of a pain, but worth it if you drive to cons in other cities.
Use of Home: Again just like it sounds. If you have a desk, bookcase, etc. at home that is used just for your writing, you can write of some of your house costs.