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A Canadian resident is taxable on income earned anywhere in the world. It may be a crime intentionally not to report income.
Income includes grants, scholarships, investment income, payment of services as dancer, teacher, choreographer, etc. Most organizations issue information slips, such as T4's and T4A's, a copy of which goes to the federal taxing authority. Payment for some freelance work does not get reported this way, but it is still taxable. It is the individual's responsibility to report the income on their annual tax report from these income sources, such as tips received from casual work, temporary office work and your professional dance income, whether or not reported on a T4/T4A. The sum of all of these is total income.
Net income results from deducting RRSP contributions, a few other rarely claimed deductions and, if you are self-employed, allowable expenses. Allowable expenses include, for a self-employed person, any outlay for the purpose of earning income, subject to a few exceptions. This can include expenses related to your training, the production costs of your own choreography, research materials such as books and CDs, costs of your promotional materials, mailing, etc. There are sometimes other deductions to arrive at taxable income.
FACT
Most arts councils/agencies generally forwarded the information slip(s), such as T4's and T4A's, to Canada Customs and Revenue Agency (CCRA) of the amount of your most recent grant award. You may be notified by CCRA if you fail to report this income.
TIP!
If in doubt, consult a specialist.
Article originally contributed by Oliphant + White
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