Do I need to pay taxes ? (canadian minor)?
May 3rd, 2009 by adminI'm running a paid membership website where all payments are made via PayPal. I make ~ $3000 per year, and never thought about taxes or anything. I am 15 years old. Now, I thought I would expand my revenue sources, and leaned towards affiliate programs. I enrolled in a few of them, and they asked me to fill out W8 forms (90% of my income is coming from the US). I filled them up, and sent them. Now that I'm rethinking about it, since I'll be expanding so much and promoting much more, I expect my revenue to double or triple during the next year. Maybe even more. Do I even have to care about taxes at my age ? Will my parents have to report my income as theirs or something ?
Summary:
15 years old.
Current income: $3000 yearly, 90% USA.
Not paying any taxes at all right now (didn't think about it before now).
Expected income in a year from now : $6000 to $10000 (75% USA)
Advice concerning this will be greatly appreciated, as I don't want to get in trouble because of that.
Thanks!
I started filing my taxes at 14. The momnet you have an income, you need to pay tax upon it. this does not matter if you are a minor or not.
Category: business affiliate programs : 
May 3rd, 2009 at 12:04 pm
yes unless u wanna be tha nex al capone
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May 3rd, 2009 at 12:29 pm
Because you are a minor and your parents are claiming you on their tax return things get kind of strange in the world of income tax.
If you think that you are going to be making more money you should talk to an accountant because it may make sense to become a corporation and draw a salary from the income. Then you can write off a lot of things like your computer lease (always lease not own when you have a business..lease you can write off yearly when you purchase it is a one off) You can also write off cell phone, internet service etc. And I am not sure exactly what type of business you have but there may be GST owing as well.
15 and making $10 000 a year? I am mighty impressed. Make sure you invest heavily and you can retire when you are 40!
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May 3rd, 2009 at 12:57 pm
You might want to talk to a Chartered Accountant who can steer you in the right direction on taxes and on running your business. However, your business is resident in Canada and is liable for Canadian taxes on its profits. Your best resource for information is CCRA (Revenue Canada) at their website regarding business income for sole proprietorships.
http://www.cra-arc.gc.ca/tax/business/topics/solepartner/menu-e.html
Given your expected level of income, you are probably better off filing your own T1 tax return because you can make use of the lower tax rates. You'll also have the personal exemption. Your parents can probably help you with the mechanics of the T1. Regardless of whether you are incorporated or not, business expenses are deducted from business income to arrive at profits. Check CCRA's website to help you determine what some of your business expenses are. If your sales are over $30,000 you'll need to register for GST. Keep in mind you only charge GST (and depending on your business PST) on sales delivered in Canada. Since Canada has a Canada-US tax treaty, depending on the nature of your business, you will not be liable for US federal income taxes. The W8 BEN that you filled out says that you're paying Canadian taxes on the income, otherwise some companies won't do business with you. Generally the W8 is sent to your customer for their records. Depending on how much your business grows, you may need to get a US tax number, however your liability for tax wouldn't change. The US government just wants to know who you are.
Good luck growing your business. Taxes are just a fact of life.
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May 3rd, 2009 at 1:29 pm
I started filing my taxes at 14. The momnet you have an income, you need to pay tax upon it. this does not matter if you are a minor or not.
References :