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ARTICLE · 08 OCTOBER 2013

Crowdfunding Proceeds May Be Taxable

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Crowdfunding has been defined as "the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet".

CanadaTax
Ted Citrome
Ted Citrome
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Crowdfunding has been defined as "the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet".  Crowdfunding has been used to support various activities, ranging from disaster relief and political campaigns to commercial enterprises such as motion picture promotion and start-up company funding. In a recent technical interpretation (CRA document number 2013-0484941E5), the Canada Revenue Agency ("CRA") was asked for its view on the tax treatment of funds received by a taxpayer via crowdfunding. 

It appears that the CRA's comments are intended to apply to a specific scenario where a person who contributes funds to a commercial venture, such as producing a musical recording, may receive a free product or promotional item, but would not receive any equity and would not be entitled to a share of the profits from the venture. The CRA stated that it generally considers crowdfunding proceeds

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