Whether you’re an OnlyFans performer or are one of the few who use the platform to promote educational content, one thing is certain – creators must report all income that they earn on OnlyFans.
OnlyFans has over 60 million users worldwide and is home to over 750,000 content creators, many of whom use the UK-based streaming platform as a primary or secondary source of income.
Below, I’ll give you an overview of the applicable taxes that you’ll need to pay, explain how to claim business tax deductions, and give you some helpful tips for saving for, filing, and paying your OnlyFans taxes in Canada.
As Benjamin Franklin famously stated, “Nothing is certain but death and taxes.”
While OnlyFans does allow users to share free content, the vast majority of creators on the platform use the streaming service to generate income by:
- Selling pictures, videos, and content packages
- Receiving tips while performing live
- Charging for one-on-one chats
If you’re just on OnlyFans for fun and aren’t earning income as a content creator, then you don’t have to worry about taxes. However, if you’re earning money from the platform (no matter how little), you’ll need to pay your taxes.
Recently, the CRA began cracking down on social media influencers and online content creators who hadn’t filed their taxes or properly reported their income. In addition to OnlyFans, the CRA has been keeping close track of high-profile accounts on:
These apps all allow creators to earn money from affiliate marketing commissions, brand partnerships, tips, and even allow them to sell products and services.
Given that the majority of OnlyFans creators are sex workers, the platform has become a lucrative source of income, with some creators earning well over $100,000 per year.
Initially, it was difficult for the CRA to track online income obtained from social media and streaming platforms, as these platforms don’t require users to register for a business. Many users mistakenly believe that since their account isn’t an official business that they don’t have to pay taxes.
Additionally, many of the users on these platforms are younger influencers between 18 and 25, who may not be the most informed on Canadian tax laws.
Unfortunately, this assumption is wrong, and has resulted in many content creators being required to pay back taxes to the CRA.
OnlyFans creators who are earning revenue from their content are required to pay the same taxes as any other self-employed small business owner in Canada, including:
- Business income tax
- GST/HST sales tax
- Personal income tax (if you pay yourself as an employee of your business)
- Dividend Income (if you pay yourself in dividends through your corporation)
Most OnlyFans creators in Canada operate as a sole proprietorship, which is a company structure with a single business owner. As a sole proprietor, you’ll report all of the income that your OnlyFans account earns, deduct your eligible expenses, and pay a percentage of the sum to the CRA as self-employed business taxes.
The federal tax rate you’ll pay depends on how much money your business earns. The more money your business earns, the greater taxes you’ll be required to pay. The current federal tax rate for self-employed businesses in Canada is as follows:
- 15% on the first $50,197 of net income
- 20.5% on the amount between $50,197 and $100,392
- 26% on the amount between $100,392 and $155,625
- 29% on the amount between $155,625 and $221,708
- 33% on the amount over $221,708
For example, if your OnlyFans page earned $100,000, then you would pay 15% on the first $50,197 and then an increased tax rate of 20.5% on the remaining $49,803.
Provincial Sales Taxes (PST) are levied on goods and services sold within each Canadian province. Additionally, the federal government charges its own 5% federal GST.
Some provinces require businesses to pay separate provincial and federal GST taxes, while others have combined their provincial sales tax with the federal GST to create a single Harmonized Sales Tax (HST).
Here are the GST/HST tax rates within each Canadian province and territory:
|Province/Territory||Sales Tax Type||Provincial Sales Tax (PST)||Federal Goods and Services Tax (GST)||Harmonized Sales Tax (HST)||Total Sales Tax|
|Newfoundland and Labrador||HST||N/A||N/A||15%||15%|
|Northwest Territories||GST Only||N/A||5%||N/A||5%|
|Prince Edward Island||HST||N/A||N/A||15%||15%|
Initially, OnlyFans creators did not have to pay GST/HST sales tax in Canada. However, the CRA began requiring OnlyFans creators to register for and start paying GST/HST once they begin earning above $30,000 per year.
There’s just one problem here – OnlyFans doesn’t provide functionality for creators to charge the additional sales tax when receiving payments and tips.
However, the OnlyFans platform itself collects GST/HST taxes from Canadian fans who make payments through the platform. This results in a bit of a tax conundrum for creators.
The CRA is technically double-dipping by accepting GST/HST tax payments from the OnlyFans platform and also requiring creators to pay their GST/HST taxes separately.
So, what are OnlyFans creators supposed to do?
Based on some research from a case mentioned on r/PersonalFinanceCanada, it seems like the only solution is for content creators to invoice OnlyFans for the amount of GST/HST the platform’s payment processor took from fans.
Then, the creator would take this amount and use it to pay the GST/HST taxes requested by the CRA.
The problem here is that this process can take quite a bit of time and may require the creator to pay accountants and lawyers to facilitate the process. Given the headache and costs, many creators just ignore the fact the CRA is double-dipping and pay the separate GST/HST taxes anyway to avoid difficulties.
Here is what one reader, Lisa, wrote in the comment section below:
Regarding HST and invoicing OF. OF will not receive a creators HST number. They just ignore the request and say that Canadian creators are responsible for all Canadian taxes including HST. It’s a real issue for creators and most creators don’t even understand this. Wish CRA would get a hold of OF base in Toronto and sort this out for creators. I was told directly from a CRA HST auditor that CRA is basically double dipping.. There exact words to me.
- Note– this is only applicable if your OnlyFans business is registered as a corporation.
As a sole proprietorship, you’ll just be required to pay your standard business taxes and any applicable GST/HST sales taxes. However, if you incorporate your business, then you’ll technically be paying yourself as an employee of your business.
In this case, you would pay yourself a set salary. Note that the corporation will have to pay Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premium payments if you decide to go this route, which can be quite significant.
You (as the receiving employee) would be required to pay personal income taxes on the salary you received, just as you would if any other business you were employed at were to write you a cheque.
Dividend Income Tax
Business owners in Canada may choose to pay themselves in dividends rather than a salary for several reasons, primarily related to tax planning and flexibility. Here are some common reasons why:
- Lower tax rates: Dividends in Canada are taxed at a lower rate compared to personal income (salary). This is because dividends are paid out of after-tax corporate profits, and Canada’s tax system aims to integrate corporate and personal taxes to avoid double taxation. Business owners may prefer receiving dividends to take advantage of these lower tax rates.
- Tax deferral: Business owners can defer personal taxes by retaining earnings in the corporation and paying themselves dividends later. This can be beneficial if they expect to be in a lower tax bracket in the future, as they would pay less tax on the dividend income at that time.
- Avoiding payroll taxes: By taking dividends instead of a salary, business owners can avoid paying payroll taxes, such as the Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premiums. This can lead to cost savings for both the business owner and the corporation.
- Flexibility: Dividends provide more flexibility than a salary. Business owners can choose when to pay themselves dividends and in what amounts, allowing them to optimize their cash flow and tax situation.
- Simplified administration: Paying dividends instead of a salary can simplify business administration. There is no need to set up and manage payroll, make payroll tax remittances, or issue T4 slips for salary income.
OnlyFans has a very simple business model. Creators are able to earn as much money as they can generate (while adhering to the platform’s tip and payment limits, of course). OnlyFans takes a 20% cut of all of their earnings, allowing creators and performers to keep the remaining 80%.
When claiming your OnlyFans income, you would be required to claim the 80% that you receive. Since you never actually received OnlyFans 20% cut, you aren’t required to pay taxes on that amount.
That being said, some accountants may encourage you to claim all 100% of your earnings. Then, you would write off 20% as a tax deduction. Either way, you’re not actually collecting OnlyFans’ 20%, so you won’t pay taxes on it.
OnlyFans offers several different ways for creators to earn money with the platform. The most straightforward way to earn is to sell content at a set price.
However, creators can also earn tips during live performances, which can cause a bit of confusion when filing your tax returns.
As far as the CRA is concerned, though, creators are required to pay taxes on all income earned through OnlyFans, including tips. Tip income is taxed the same way as income from regular sales, which makes filing your income pretty simple.
Technically, there is no “gift tax” in Canada, which means that individuals are free to receive cash gifts without having to report it on their taxes.
However, the CRA makes an exception for gratuities and gifts received from working. If you receive money as a “gift” from a fan, then you’re still required to report it as income, just as you would with your tip money.
Since the gift is directly related to your income, you will have to report it on your taxes. The only gifts that aren’t taxable are those that are personal (i.e., your grandmother giving you money for your birthday).
Although OnlyFans is based out of the UK, it’s available to users and creators around the globe. As a result, many Canadian creators receive tips and income from fans in foreign countries.
OnlyFans doesn’t differentiate where the money comes from, though. All of your tips and payments are held by OnlyFans and are dispersed as lump sum payments.
As such, money earned from foreign sources is treated the same as money earned from your Canadian fans. You’ll report it on your taxes as income and pay the same tax rate.
If you’re a self-employed content creator in Canada, then you’ll need to file your small business tax returns no later than June 15th, which is the late filing deadline. Self-employed businesses that don’t file for an extension are required to file for and pay their taxes by April 30th.
If you fail to file for an extension and file/pay after the April 30th tax deadline, then the CRA will begin charging interest on the amount that you owe. Interest compounds daily and can quickly add up, so it’s in your best interest to pay as soon as possible.
If you’ve registered your OnlyFans business as a corporation, then you’ll have a bit more time and will have until the last day of June (six months after the business year ends) to file.
The CRA doesn’t mess around when it comes to its money. Once you file your taxes, the amount you owe will start accumulating interest if you’re unable to pay by the April 30th deadline.
In addition to growing interest on your tax balance, the CRA will also reach out. Expect to receive mailed letters, emails, phone calls, and notifications on your CRA MyAccount.
The harassment and interest won’t stop until you pay your tax balance in full.
If you owe a substantial amount to the CRA, then things can get a bit tricky. If you’ve failed to set up a payment plan or have been avoiding CRA correspondence, then the CRA may send a revenue officer to your address to attempt to collect the amount or set up a payment plan.
If this fails, then the CRA can:
- Garnish your wages
- Seize your home
- Seize your land or assets
Trying to avoid the CRA is not something I recommend doing. You may get away with it for a while, but eventually, agents will catch up to you and you’ll be required to pay everything you owe plus interest.
Technically speaking, failing to pay your taxes isn’t a crime. You’ll just have to pay additional interest, fees, or risk losing your assets.
However, failing to file your taxes is a crime.
At first, you may just receive a late-filer notification with late fees imposed. However, if you still fail to file your taxes, then you could be charged with tax evasion.
The CRA takes tax evasion very seriously. Between March 2017 and April 2022 the CRA has:
- Convicted 140 taxpayers
- Sentenced taxpayers to over 119 years in jail (collectively)
- Imposed $17 million in court-related fines
In addition to failing to file your business taxes, tax evasion also includes activities such as:
- Filing for tax deductions that you’re not eligible for
- Trying to minimize your income by lying on your tax returns
- Failing to report income that you earned
With penalties like jail, fines, and asset seizure on the line, trust me when I say that you do not want to mess with the CRA. The organization employs teams of high-paid analysts and investigators whose everyday job is to find people trying to skip out on their taxes.
If you’re smart about saving your money, then taxes shouldn’t be a huge burden. At the end of the day, it’s just a matter of calculating and separating your tax obligations from your earnings, so that you don’t mix them up.
With that in mind, here are some helpful tips to help you save money for your taxes and ensure that you don’t end up on the CRA’s bad side.
OnlyFans typically pays out creators on a weekly basis, so you can expect a direct deposit into your chequing account every week. To make your taxes easier, I recommend separating your tax obligations every time that you receive a payout from OnlyFans.
To do this, calculate the GST/HST taxes you’ll pay on the amount and add it to the self-employed income taxes that you’ll need to pay. Then separate this amount and place it in a separate savings account for tax purposes.
For example, let’s just say that you live in Ontario and received a $500 payment from OnlyFans.
- Ontario has an HST rate of 13%, which would equate to $65 out of the $500
- Assuming the base self-employed income tax rate of 15%, you would take an additional $75 out of the $500
- The total HST + income tax on the $500 would be $140
- Take the $140 out of your chequing account and place it into a savings account to go toward your next tax payment
This is a rather basic example, but you get the point.
Keep in mind that you may not be required to pay all of this in taxes. At the end of the year, you’ll have a chance to deduct your business expenses from your business income, which will reduce your tax liability. You’ll likely end up paying less taxes than you saved for.
In my opinion, though, it’s better to save more and pay less than to not have enough saved.
One of the most useful hacks you can employ while saving for taxes is to store your tax savings in a high-interest savings account.
These accounts allow you to earn interest on the amount you have saved, which can allow it to grow even more. HISA accounts pay you far more interest than traditional savings accounts from big banks.
I recommend using Neo Money, as they currently offer a generous 2.25% interest rate on every dollar that you have saved, and pay interest monthly by contributing it to your account balance.
For example, if you have $10,000 saved in your Neo Money account, then your account could earn up to $225 in interest every month!
If you want to maximize your tax deductions and avoid complications while filing your taxes, you should keep detailed records of all of your business-related expenses and income.
Not only will it allow you to keep better track of your business, but it will also make your accountant’s job easier, which can save you time and money when filing and paying your taxes.
The CRA charges interest on your tax balance if it’s not paid on time, which will result in you paying more taxes than you’d otherwise have to. If you want to pay less taxes, pay on time.
The easiest way to pay on time is to follow the first tip and separate your calculated tax obligations every time you get paid.
If you end up having to pay more taxes than you expected and don’t have the money on hand to cover them, then the CRA allows small business owners to enroll in a payment plan.
To be eligible for a payment plan, you’ll need to have filed your business tax returns for the previous year. Then, you can log into your CRA My Account or your CRA My Business Account and arrange a plan that works best for you.
If you earn more than $3,500 per year as a self-employed OnlyFans creator, then you’ll be required to contribute the employer and the employee CPP amount, which amounts to a total of 11.4% of your net income (after deductions).
To ensure that you’re able to make your CPP payments, I recommend separating and saving this amount out of each OnlyFans payment you receive and storing it in a HISA account.
To reduce your overall tax liability, you’ll want to maximize your business tax deductions. This will result in a lower net income, which in turn will result in you having to pay less taxes. Some of the most common OnlyFans creator tax deductions include:
- Internet Data Usage (Mobile Data & Wi-Fi)
- Office Space
- Computer & Film Equipment
- Advertising Costs
- Outfits, Accessories, & Decor
- Cloud Storage Fees & Business Software
Professional Tax Assistance for OnlyFans Creators
Given the complex nature of taxes, especially for those earning income from digital platforms like OnlyFans, professional assistance can be invaluable. Engaging with a tax professional can save you not only money but also time and peace of mind.
Why Consider Professional Assistance?
- Understanding Deductions: There may be potential tax deductions that OnlyFans creators are unaware of. A tax expert can help identify these, ensuring that you’re not overpaying on taxes.
- Foreign Income Complications: As mentioned, OnlyFans operates globally. This brings about complexities when dealing with foreign income. A tax professional can assist in navigating these waters.
- GST/HST Issues: As addressed above, there’s a unique situation surrounding GST/HST for OnlyFans creators. Getting clarity on how to handle this can save creators significant stress and potential financial loss.
- Avoiding Penalties: As discussed in the previous section, non-compliance can be costly. Engaging with a professional can help ensure that you remain compliant and avoid unnecessary penalties.
If you’re earning significant income on OnlyFans or are unsure about your tax obligations, it might be worth the investment to consult with a professional. It’s not just about filing taxes but also about tax planning – ensuring you’re set up for future success and financial stability.
What is the industry code for OnlyFans in Canada?
OnlyFans primarily operates as an online platform where content creators can sell their content, typically of a personal and sometimes mature nature, directly to their fans. In Canada, industry codes (also known as NAICS codes) are used for business classifications.
The exact industry code for OnlyFans can depend on the nature of the business being conducted. Many creators might classify themselves under “519130 – Internet Publishing and Broadcasting and Web Search Portals” due to the online content distribution.
However, those providing artistic performances might consider “711510 – Independent Artists, Writers, and Performers”. It’s important for individual creators to choose the code that best fits their specific activities on the platform.
How do Canadians get paid from OnlyFans?
Canadians on OnlyFans typically get paid through electronic fund transfers directly to their bank accounts. OnlyFans supports several payment methods, but bank transfer tends to be a common method in Canada. The frequency of payments can vary, but it’s usually on a monthly basis, provided the creator has reached the minimum payout threshold.
Nobody (myself included) likes having to pay business taxes. However, they’re an unavoidable part of life and trying to evade the CRA is only going to make your life more complicated and could result in you paying even more taxes, penalties, and late fees.
So, do yourself a favour by saving for your taxes ahead of time and pay them on time, every time.
When it comes to filing your self-employed business taxes as an OnlyFans creator, the best thing you can do is keep detailed records of your business expenses and income. Keep on reading to see my list of the best small-business accounting software!