What Is the Digital Economy?
The digital economy is all the economic activities and new business models made possible by transformational digital technology and the Internet, specifically search engines and platforms such as social media.
Some sectors of the digital economy are listed below. You may have certain tax obligations for them.
E-commerce refers to the sale of goods and services online via social media, transactional websites and digital platforms. The following people who participate in e-commerce are considered individuals in business:
- individuals who sell goods and services on platforms such as Amazon, eBay or Etsy;
- individuals with a transactional website who ship items to buyers via a supplier (dropshipping).
Click E-commerce to learn more.
The sharing economy is based on individuals sharing property, services or expertise on digital platforms without or without money changing hands. Some platforms (such as Uber, DoorDash and Airbnb) manage everything from posting and promotion to payment and customer service, whereas others (such as Facebook and its Marketplace) simply allow users to post goods for sale without managing payments.
Participants in the sharing economy must check whether special tax rules apply to them.
Click Sharing Economy to learn more.
Virtual currency is a digital representation of money that is not legal tender in Canada and does not physically exist. It can be used for immediate payment (provided the seller accepts) or saved for future payment. It can be traded on an exchange or peer-to-peer without going through a traditional financial system.
There are different types of virtual currency. The most well-known type is cryptocurrency (Bitcoin, Ethereum, etc.). Transactions involving crypto or another virtual currency are generally considered barter transactions, and the regular barter rules apply.
To report your income correctly, you must determine whether your use of virtual currency resulted in a capital gain or loss, a business income or loss, or property income.
Influencers, bloggers, gamers and personalities use their visibility to earn income by advertising products on their social media.
Click Influencers, Bloggers and Other Individuals Earning Income Online to learn more.
If you earn $1,000 or more from the sale of personal-use property (virtual garage sale, online sale of second-hand items, etc.), you must report the proceeds as a capital gain. The adjusted cost base (ACB) of the property is $1,000 or the actual ACB, whichever is greater.
To learn more about tax obligations in the digital ecoomy, click Are you involved in the digital economy?
Thanks to the varety of available digital platforms, you can have more than one source of income. For example, you can deliver meals, rent out your car or home, do home maintenance or renovation work, or transport passengers.
This is the gig economy. If you participate in it, you will have to submit separate income and expense statements for each of your activities. And make sure to find out what other obligations apply to your various activities.
If you earned income online through social media, digital platforms or websites but did not report it, we encourage you to make the necessary corrections to avoid paying penalties and interest and to take advantage of relief measures.
See the pages below to find out how to make changes to a return for a previous year or put your tax file in order (for example, by correcting a GST or QST return)
Reporting your income doesn't necessarily mean you'll have to pay income tax. There are benefits, too:
- tax credits such as the work premium and solidarity tax credit
- eligibility for parental benefits
- increasing your RRSP contributions
- a retirement pension from Retraite Québec based on all your income
- a better financial profile for financial institutions
Report your income. It's fair for all.
If you carry on a business in Québec, you are required to keep registers. They can help us confirm your income and expenses and determine the amount you owe us or we owe you.
Your records and supporting documents (including electronic records) must generally be kept for at least six years after the end of the last taxation year they cover.
For more information, click Keeping Your Registers and Supporting Documents.