Since the introduction of short-term rental services, there has been an effort from both provincial and government to provide a better understanding of rules and regulations. These guidelines are for people who want to participate and earn from services like Airbnb. Here's what you need to know about your Airbnb rental income in Canada.One of the most basic regulations that you need to make sure of is the declaration of your rental income to the CRA. This guide will help you understand all the ins and outs. It will help you become compliant with the government while still managing to earn.
How You Can Declare Your Rental Income
Everyone knows that these days services like Airbnb have increased demand. This increased demand is why Airbnb has been working with the CRA to help forge guidelines so Canadians can declare their rental income and become compliant in Canada. There are two types of income that you can declare:
- The first one is the rental income, and you are obligated to declare this income if you are renting a part or room on your property and to do that, you need to fill form T776
- The second one is Business income, and you are obligated to declare this income. If you provide additional services while renting, like food and laundry, it will need to be declared a business. Because CRA views this as a type of Business. You need form T776 as part of self-employment income and Canada pension plan CPP on net income.
Sorting Out Expenses
These are the expenses that you need to consider when renting out your Airbnb that can be tax-deductible:
- Your Current Expenses are considered ongoing expenses that don't necessarily provide you with lasting benefits such as your electricity.
- Your Capital Goods, which generally are long-term and provide lasting benefits and advantage.
Rental is a Rental
Remember, in the eye of CRA, any income you are earning out of your home or any other type of property will be considered rental income even if you rent it for a day or two or once in a while. Like other types of income, any money you make has to be declared to the CRA as an income on your personal income tax returns. But before you worry, there is good news. Keep in mind that since you will be reporting your income. You will be able to deduct all the expenses on that said income. This will help you manage your income and help you save, and you don't have to spend more.If you want to know more about taxes and how they work, or if you want any service related to taxation. Feel free to contact us, and we would be happy to assist you.