2020 is a weird year for filing taxes.  For many, it could be the first time that they owed taxes.    Sure, there were a few freebies, like the one-time extra GST/HST credit, but if you collected the max CERB of $14,000, that was handed out pre-tax and it’s a taxable benefit that will get added to any other income earned in 2020.  If you collected the modified EI known as CRB, you have 10% ($100) deducted at source, so that’s why you are only getting $900, and that helps with the tax.  Returns need to be filed April 30^th (self-employed returns on June 15, 2021), but any money owed by anyone is due April 30^th.       I sat on a panel earlier this year with Joe Bartok, founding partner of This is the Deal Inc.  Joe and his team provide accounting, consulting, and tax planning services for those in the entertainment industry, and I asked him to chime in on a few things. 

So how much tax will you owe?
It depends.  In 2020, the Basic Personal Amount (BPA) for most is $13,229. The BPA is a non-refundable tax credit that reduces what you may owe. You have to add all your income, including self-employed income, when you do your taxes.  “We expect many musicians (and other entertainers) to incur self-employed business losses for 2020, which may offset some of the taxes owing for CERB and CRB”, says Bartok. “Be sure to include all expenses that relate to your work as an entertainer, especially those that carry on throughout the year”.

What if you haven’t done your taxes for a few years?
Well, you are essentially committing tax evasion by intentionally ignoring Canadian tax law. There can be hefty penalties, fingerprinting, a possible criminal record…you get the idea. This can damage your rep and your future plans for touring in Europe in 2022.  If that last one did not light a fire under your ass, I don’t know what will. Plus, you will feel so much better once they are filed. “The key to a quick and painless multi-year catch-up is for the taxpayer to have all their materials summarized by year, before handing-off to the accountant” says Bartok.

So where do you start?
Bite size chunks people.  Don’t think that you can do 5 years of back taxes in an afternoon.  Find a clear space, or even your bed.  Get 6 letter trays, envelopes, sticky notes, a stapler, and paper clips from the dollar store.  Label 5 trays by year and sort your stuff.  Create a basic spreadsheet for your self-employed musician income & expenses.  Go year by year, starting oldest year first.  The 6^th tray is for completed years, ready to be filed with your accountant.  When you are ready for bed, stack the trays neatly and bite off another couple hours the next day.

What if you owe and can’t afford it?
Don’t panic!  And definitely don’t go to a payday loan store.  The rates they charge are almost criminal, just under the illegal loan shark rates of 60%.  Instead, contact CRA and discuss payment plans.  Submit a budget and a hardship letter that explains why you are faced with financial difficulty. SEND IT REGISTERED MAIL and KEEP A COPY OF WHAT YOU SEND! EXPURLATIVE CAPS USED FOR A REASON CUZ SHIT GETS LOST.