How To Avoid Tax Debt As A Member Of Canada’s Growing Gig Economy

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Whether it’s driving an Uber between shifts, selling the product of your hobby on Etsy or renting out the apartment in your basement as an AirBNB, more and more Canadians are opting for on-the-side jobs, becoming members of Canada’s ever growing “Gig Economy”.

The number of Canadians working on the side has more than doubled in the last 40 years according to Statistics Canada, and research conducted by Intuit Canada predicts that by 2020, 45% of Canada’s work force will be generating self-employed income under a “Gig Economy”.

What’s a “Gig Economy”?  It describes a growing workforce made up of people earning a living through “gigs” like freelancing work or short term contract jobs.  Drivers of the Gig Economy are the brave many who choose to ‘be their own boss’.

As a Licensed Insolvency Trustee, I’ve listened to many self-employed individuals talk about the financial struggle of dealing with insurmountable tax debt.  In many cases, the tax debt was so overwhelming that the only option was to file a personal bankruptcy.  The importance of being diligent with filing your income tax returns and making your remittances to Canada Revenue Agency on time is undeniably real and can save you the cost of penalties, interest and sleepness nights.


Having a proper record keeping system in place.

  • The moment you start working for yourself is the moment you have to start maintaining proper books and records. Not only will this help you at tax time, but in preparation of a audit from CRA, you’re expected to keep all of your paperwork for at least six years.
  • Keep a record of your income/revenue and expenses. What’s crucial is the day-to-day recording of transactions impacting your business. There are all sorts of methods available that will help you do this like using software or a spreadsheet. There are also apps you can have on your phone like Expensify or Freshbooks which helps you capture expense receipts, mileage, send invoices, etc.

Filing your taxes on time.

  • As we know, April 30th is the deadline for us as taxpayers to file our income tax returns. Self-employed people have a deadline of June 15th; however, CRA begins charging interest on taxes owing starting April 30th. It is important to pre-plan knowing you need to have your remittances paid by April 30th to avoid interest charges.
  • Filing your return late triggers penalties. The moment you’re late, you’re hit with a 5% penalty of the balance owing, plus an additional 1% for every month the return is late. Over the year, this could add up to a maximum penalty of 17%.
  • Familiarize yourself with CRA’s online portals called “My Account or My Business Account” where you can check on the status of your tax accounts (like your GST account), the remittances you’ve made and to stay on top of important due dates.

Knowing that the cash you receive from a job you complete isn’t disposable income you have available to spend as you wish.

  • Although there are benefits of being self-employed, one of the pitfalls is overlooking the fact that your income is still subject to taxes which must be paid to CRA. A good routine is to set aside 20-25% of what you earn for taxes. Remember, even though your tax return must be filed by June 15th, you must pay what you owe to CRA by April 30th.

The accumulation of tax debt year over year has dire consequences. CRA has a number of powers and remedies to collect what you owe them and most often, there is no notice given to you.


  • You’ll be charged compounded daily interest on the balance. The fact that the debt keeps increasing should be enough motivation to pay it off as quickly as possible.
  • You’ll lose your GST credits or future tax refunds. CRA can make use of a ‘statutory set-off’ by applying your credits and refunds to the tax debt.
  • Your bank account funds can be seized. CRA can garnish without going to court and can serve notice on your bank or any party who owes you money.
  • Your home can be affected. CRA can register your debt with the Federal Court of Canada and obtain a “Certificate” which can be enforced like a judgment order. This certificate can be registered against your property which means if you sell it, you might not see any equity since CRA will get paid first.

These are stressful situations to face but being proactive is key to ensuring you stay on the good side of CRA. Taking simple steps like hiring a good bookkeeper or accountant to help you stay compliant while you focus on the business is money worth spending.  Be realistic about your skills and abilities when it comes the paperwork.  It’s true that record keeping isn’t everyone’s strong suit, but CRA does not see this as an acceptable reason to to ignore tax filings and remittances.

When in doubt, seek help from a professional.  If you’re unsure how to get started, seek help from a tax professional. If you’re struggling financially and worried about paying off your tax debt, speak to a Licensed Insolvency Trustee about your options before CRA takes action against you.

Freida Richer LIT


Freida Richer is a Licensed Insolvency Trustee with our Edmonton, Alberta practice. You can watch her Money Smarts segment on the third Monday of every month on Global Morning News Edmonton.

Brokenhearted with an Empty Wallet—Warning Signs of Online Relationship Scams

BlostPost - Brokenhearted with an empty walletAs a Licensed Insolvency Trustee, I hear a variety of facts, circumstances and events that have led to one’s financial distress. Being victimized through an online relationship scam can leave someone both emotionally and financially devastated.

According to the Canadian Anti-Fraud Centre, online relationship scams are the highest grossing scam compared to other internet frauds. As is usually the case, the online dating starts out innocently on a legitimate dating website, but evolves with intention by the perpetrator to ultimately steal money from the innocent party. It’s tough to pinpoint the exact number of people in Canada who have been victimized by an online dating scam, because a person is usually too embarrassed or ashamed to admit that they were taken advantage of.

The most heartbreaking story I’ve heard was from a lady who was involved in a nearly one year online relationship which was ultimately discovered to be fraudulent.  Throughout the “relationship”, she lost in excess of $100,000—her entire life savings—from a series of wire transfers to the perpetrator.  She didn’t see the warning signs at the time. Why? She believed him.  She was in a time in her post-divorce life where she was desperately seeking companionship and he preyed upon that.

With love being top of mind during the month of February, those involved in online relationships should take time to evaluate whether their relationship is causing them financial distress.

Look for the non-financial warning signs by asking yourself:

  1. Is he/she “too good to be true”? Have your guard up if they appear perfect or are giving you all the right answers all the time.
  1. Is he/she transitioning the contact from the dating site to personal email, text or phone? If so, they may be moving into their next phase—gaining trust and more personal information from you outside of the restrictions of a bona fide dating website.
  1. Is he/she making excuses for not being able to meet in person (i.e., problems with their travel visa or lost passport)? Keep their reasons for not being able to meet in your back pocket and determine if there is a pattern.

Look for the financial warning signs by asking yourself:

  1. Am I being asked about my financial background in the early stages of the relationship? If they want to know how much you earn, the car you drive, whether you invest, or the kinds of credit cards you have, you’re being sized up. This is the start of their attempt to gain access to your assets, money and credit.
  1. Am I considering sending money to this person and why? Scammers often use the excuse of an “emergency” or “crises”, like a sick family member. The dollar amounts usually start out small, but progressively get higher and with more frequency.
  1. Am I using credit more frequently to cover living expenses or taking out bank loans? Finding yourself with more money issues since you’ve started the online “relationship” should be a clear warning sign.

Taking these simple steps can prevent you from falling victim to an online dating scam:

  • Tell a family member or close friend about your new relationship.  Victims have told me in hindsight that had they told a friend about the first wire transfer of money, matters wouldn’t have escalated.  If you’re blinded by love, let your friend or family member be that voice of reason.
  • Don’t release financial information about yourself and never send money to someone you’ve met online.  Be clear from the start that there will be no discussions about your finances, and if a request for money is made stop communications immediately.  If these conditions are a problem for the other person, then you’ll know where their intentions lie.

If you are concerned that you are being financially targeted in an online relationship, you should contact your bank immediately to stop payment on any cheques or money transfers you’ve recently issued.  Unfortunately, any money you’ve given the perpetrator up until that point is money you’re never going to see back.  Next, report the matter to the RCMP.  You’ll likely be directed to file a report with the Canadian Anti-Fraud Centre.

If you are now facing overwhelming debt because of a fraudulent online relationship, it’s important to speak to a Licensed Insolvency Trustee.  The emotional toll of not only losing the relationship, but your savings as well, can make it extremely difficult to focus on resolving your situation. A Licensed Insolvency Trustee can help sort out the situation and help you come up with a viable solution to your financial troubles. Practical solutions such as budget adjustments, debt consolidation and a consumer proposal are all options to consider before bankruptcy.

We can’t mend your broken heart, but we can help mend the hole in your wallet.

Freida Richer LIT


Freida Richer is a Licensed Insolvency Trustee with our Edmonton, Alberta practice. You can watch her Money Smarts segment on the third Monday of every month on Global Morning News Edmonton.

#GTKnowledgeIsMoney – How to Teach Children About Money


Financial Literacy Month is about helping Canadians establish healthy financial habits. When it comes to your finances do you ever find yourself thinking “Wow, I wish I knew that years ago!”?

That’s why it’s never too early to start teaching kids about money.

That brings us to this week’s topic – How do I teach my children about money?

Teaching children about money is an ongoing process that helps them to understand money management early on and provide helpful skills to prepare them for adulthood.

Here is our step by step guide to help you get started:

  1. Get them involved
  • Teach your kids about what the different methods of payments are and how they work (ie the debit card – and the idea that there is always money there – money doesn’t grow on trees).
  • Talk to them about the budget and how much things cost and where the money comes from. Keep them on a budget (needs vs wants).
  1. Have a conversation about money and budgets early on
  • Don’t wait to have a conversation with your children about how to budget, teach them how to budget and keep the conversation going.
  1. Talk to them about credit and how it works
  • Tell them about the importance of having an emergency/savings plan.
  1. Give your kids an allowance for work
  • Pay your children an amount that you are comfortable with when they do chores around the house. If they do not do the chore, then don’t pay them as this teaches them that they must work hard to earn money.

How do you teach your kids about money? Share with us on social media for a chance to win a $500 prize using the hashtag #GTKnowledgeisMoney

8 ideas for a fun & frugal festive season


The holiday season can be a time of friendship, laughter, and holiday cheer… and a time when you feel the expectation to spend a lot of money that you may not have. This is why it can be an especially difficult time for many people: the pressure to keep up with those around us, the fear of disappointing those we typically buy presents for, the stress of not being sure how you will afford food for the table let alone presents for under the tree.

Our debt solutions counselors at Grant Thornton Limited have shared some of their tips for trying to refocus this holiday season so you can make it more about enjoying the time with the people around you. Hopefully using some of these tips will help you feel refreshed in the New Year, as opposed to wondering how you will recover from the spends made in December.

  1. Talk to family / friends about the cost of gifts. Sit down and make decisions about a dollar limit for gifts. If money is tight then consider doing a secret Santa with the family. Remind everyone that thoughtfully chosen gifts are more important than expensive ones.
  2. Take advantage of the sales. Shop the sales throughout the year by making a “Christmas closet” that you can add items for people that you find throughout the year , or after Christmas and by discounted Christmas decorations. This is also useful if you have a drop in guest who brought you a gift and if you wanted to give them something in return.
  3. Have the kids make a list.  Ask them to pick 3 items that they want: 1. One that is a real want, 2. One that is a need, and 3. One that is a small / inexpensive.item.  Let them know that they will likely only get one item off of the list – this helps teach children that Christmas is about more than presents, they put real thought into what they want, and your pocket book gets to save by not buying them gifts they don’t really want or need.
  4. Cut out unnecessary items.  This could include ribbons, bows, and fancy tape. Use brown paper bags as a fun alternative with colorful marker to write the “To” and “From”.
  5. Sell old toys / clothing.  Find a local consignment store and get extra cash for new gifts.
  6. Do Christmas baking instead of gifts.  This helps cut costs, and has the added benefit of spending time with family to make the bake goods.
  7. Take advantage of the free events to get into the spirit. Santa Claus parade, craft fairs, outdoor concerts and tree lighting ceremonies are usually offered at no-charge.
  8. Hold a “Catch up Christmas”.  This one is great if you overspent last Christmas and your budget is super stretched. Consider not spending for one Christmas. Instead, focus on a nice family meal, taking in the Christmas parade, driving around seeing the Christmas lights, and really devoting your holiday to your family by giving your time. It enables you to spend quality time with your family and no one will be stressed because the focus is on time and making memories, not spending.

Other fun free activities include: a hot chocolate and Christmas movie night, ice skating at the river, or sliding in a park, take a drive around / walk around the neighborhood for Christmas lights. Center this Christmas on family activities instead of gifts and goodies.

We put a lot of pressure on ourselves to spend money at this time of year. Let’s try to take some steps to break that cycle, enabling us to end the year and start a new year with a fresh, positive, less stressful approach. Enjoy the loved ones in your life and the memories you can make rather than worrying about the debt we can incur.

If you have money-saving gift-ideas, we’d love to hear them.  If you are finding this holiday season particularly stressful because you feel your debt load is overwhelming, please reach out to us and let us present you with some options for your situation during a confidential, no obligation consultation.  Sometimes just knowing you have options can help relieve the stress you are feeling.

Kristi Stuart is a  Licensed Insolvency Trustee (LIT) on the New Brunswick Grant Thornton team. In becoming a trustee, she won the 2015 Jack Biddell Gold Medal for finishing the Canadian Association of Insolvency and Restructuring Professional’s 2015 National Insolvency Exams with the highest standing in the country.