I've had to fill out several of them at this point because companies treat bug bounties as contract income. Google let me sign a standard statement of no US activities form instead but later I figured out it was pretty easy to deal with the W8-BEN nonsense as a Canadian anyway.
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It could be super painful in other countries because you can end up needing to let IRS take up to 30% withholding tax and then you actually have to file a US tax return to get the money back. As a Canadian, it's just a hassle to know secret password of tax treaty article to cite.
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This is up-to-date information:
michellecornish.com/blog/how-to-fi
You just need to put "business income" as the type of income instead of "royalties" with the same Article VII cited for 0% income and the same explanation that you carried out no US activities as part of getting it.
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Also, CRA recognizes that crowdfunding income is not taxable income if you aren't providing a service or product to people so you don't actually need to pay taxes on it if you aren't giving people shirts or something else the CRA could claim has actual tangible value to them.
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taxpage.com/articles-and-t is the general idea. Basically, if you give rewards, you turn it into taxable income. There's ridiculously complex information about it on the CRA site. I talked about it with an accountant and they recommended being really careful not to offer anything.
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The rules about rewards are somewhat vague and it might seem like you could get away with giving rewards in some cases without it turning it into taxable income.
However, accountant that I talked to strongly recommended never giving out any rewards including no priority support.
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Since if you start giving out any rewards at all, the CRA is going to be very tempted to claim that all the donations are business income, including from other sources. Best to just keep it all clean of anything they could possibly claim is a product or service being offered.
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Yep. This is something I looked into back when I started accepting pizza donations. No strings attached, no promises.
Thanks for all the info, nice to have something to refer back to if I need it.
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I recently won a battle with the CRA over my 2018 income taxes by the way, unrelated to anything to do with donations. They wanted $8k in additional taxes from me and somehow ended up having to pay me $3.2k since apparently I paid taxes that I didn't actually need to pay to them.
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$3.2k probably covers all the legal fees spent dealing with the CRA specifically about this but it definitely doesn't cover the massive ordeal that they put me through over 2 years. They're largely MIA right now due to COVID-19. Government employees have barely been doing work.
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It basically took a whole year of my lawyer repeatedly trying to contact them and reason with them to finally get that dealt with. I very much want to avoid any further nonsense with them so I'm extremely careful not doing anything that could make them upset about the donations.
I don't do anything they consider work anymore since I live entirely off donations. I think it's inevitable that they're going to look into it and I'm going to have to prove that I'm not giving people any product/service.
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A legitimate fear of mine, one I could not afford deal with. I'm not working either, but I'm not at that point yet where I can live off donations, currently about CAD $270 spread out in small amounts over the month.
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