Page 24 - Newcom

WHAT’S INCLUDED IN THE SHARING ECONOMY?
Car sharing
Bicycle sharing
Commute sharing
Peer-to-peer lending
Peer-to-peer accommodation
Home exchanges
Timeshares
Tool libraries
Shared office space
Garden sharing
Book swaps
Clothing swaps
And more!
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ity” when renting out a U.S. timeshare, as
do logging expenses to calculate possible deduc- tions, although these would be negligible for a timeshare. He offers this tip: don’t allow your client to claim a capital cost allowance (CCA) on her tax return when renting out a principal prop- erty, or she’ll lose her principal residence capital gains exemption.
Carroll suggests clients get appropriate insur- ance coverage. But, the cost and availability of short-term coverage could be prohibitive.
Vancouver-based Square One Insurance,
for instance, offers homesharing insurance, which typically has higher premiums (in Square One’s case, 10% higher) and substantially higher deductibles ($2,500, versus $1,000) than regular property insurance.
When renting out a timeshare, your client can depend on the timeshare company to take care of maintenance. To get that same convenience when renting out another property, your client may want to consider hiring a property management company. Rates vary by municipality and services offered, but your client can expect to pay about 8% of rent for property management.
Car for hire
Your client may earn income by using her own
car to drive others. Uber, a California-based
tech start-up, allows a potential driver to sign up online. (There are others like it, including Lyft and Sidecar.) A driver must meet the requirements (21 years old, personal licence, personal car insur- ance, background check) and have a mid-size or full-size four-door vehicle in excellent condition. (This is for UberX service; UberBLACK service has stricter requirements.) After assessing personal details and documents, Uber approves your client and gives her a phone with the Uber app so she can start accepting fares.
But this opportunity may be a non-starter if recent Canadian activity surrounding Uber is any indication. Some jurisdictions aren’t taking kindly to what they say are essentially unlicensed taxi drivers.
B.C., Manitoba, Quebec, and Hamilton, Ont. have issued warnings to drivers attempting to work on a contract basis for the company. And, in California, the company faces lawsuits from driv- ers claiming they’re employees, not freelancers,
and should have accompanying health benefits. But if your client earns business income this way—yes, this is business income that requires a business number—Carroll says clients must keep excellent records to justify deductible expenses related to the earned income.
Courcelles agrees, saying some people might not realize there are tax implications to “picking up somebody, dropping them off and getting paid to do that,” and that your client “is no different than any other business owner.”
Every trip your client takes in her car will have to be logged, he says, with the date, destination, purpose and kilometres driven in order to claim deductible expenses.
And, your client should ensure she has appro- priate insurance and liability coverage before picking up her first fare.
Since your client’s vehicle will be classified as
a commercial vehicle, she can expect the cor- responding increase in premiums. (South of the border, insurance firms are starting to offer cover- age specifically for Uber-type drivers.)
Ultimately, participating in the sharing econ- omy requires a high level of diligence. Carroll notes that CRA explicitly requires individuals to report income earned from webpages or websites. According to CRA’s website, this includes “online marketplace websites where your goods and/or services are sold.”
Although this may be a reminder to clients generating income from peer-to-peer marketplace sites like eBay or Etsy, Carroll suggests all clients be aware of the potential going forward for greater income reporting. AE
NOT-SO-EASY MONEY
Participating in the sharing economy may seem like easy money at first, but your clients will still have to put in the work:
› All income, no matter how small, must be reported to CRA.
› Excellent record keeping will be required to claim expenses.
› Agreements with online sites must be clearly understood.
› Higher insurance premiums and deductibles must be paid.
24 AE 05 2015
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