Richard Wilson has worked extensively in the film & television industry over the last ten years with people and companies on both sides of the camera and on both sides of the border. Over the years there have been questions that come up all the time. Some of those are addressed here. Of course, every particular case is potentially different but there are general principles that apply to everyone.
What can I write-off?
There are really only two real principles that you have to keep in mind. To be deductible, expenditures have to be (1) made for business reasons and (2) reasonable in the circumstances. For actor's this can include commissions, dues, telephone, meals & entertainment, professional fees, training, research and portions of home and vehicle costs to name a few. It is always a good idea to keep anything that "might" be a write-off and you and your advisor can make those judgment calls at tax-time. Obviously you need to keep receipts for everything but equally important is to document the business purpose of each major receipt. For example, you don't just need to have the plane ticket from your trip to LA but also need to document why you went.
How much money should I put aside for taxes?
As most of you are probably painfully aware, you are responsible for your own taxes (and HST if applicable) in that nothing is withheld at source on Canadian acting work. Accordingly, you need to make sure you put aside enough money for your taxes at the end of the year. A good rule of thumb is 25% of each cheque that you get. If you do that, you won't get stuck in a huge hole at the end of the year. If you have owed money in the past, you may also have to send some of that money to government ahead of time as installments. While these are not compulsory and can be adjusted based on your current year's earnings, if you do owe at the end of the year and have not paid installments as required, they will charge you interest on the payments not made or made late!
Do I need a HST number?
This one is pretty straight forward. If you earn more than $30,000 gross (total - before agent's fees and dues etc) than you have to register for and start to collect HST. Once you hit that amount, you are stuck with that HST number even if you never hit $30,000 again. If you are in this situation, discuss the situation with your advisor.
Should I incorporate?
Incorporating in Canada means creating a separate legal entity ("the company") which is also its own separate taxable entity (i.e. - the company also files a tax return) and then having your income and expenses run through the company rather than your personal return. In the right circumstances this can be a great way to reduce the taxes that you are paying. In general terms there are three ways that a company can help you:
The first is if you have dependents that don't have a lot of income you can "income-split" through a company. The second is that if you are going make a whole bunch of money in a short period of time, you can use a company to spread your income out over multiple years (which saves a bunch of taxes). Finally, and most importantly, if you are making more money than you need to pay the rent and grocery bills and can leave money behind in the company for the future, you can take advantage of the small-business tax rate which is effectively half of what you would be paying personally. Sometimes people think that there is a magical amount that they have to earn for it to make sense (and $100K plus is not a bad rule of thumb) but really it has to do with how much you spend. If you make $200K a year and spend all of it, the company is not going to help you that much. If you make $90K and only spend 2/3rd's of it, the company can definitely help.
What if I do some work in the US?
Working in the US can get complicated very fast! If you know that you are going to be working in the US you should always talk to your advisor ahead of time as the right moves in the beginning can save a bunch of hassles in the end.
I am a US citizen, does that matter?
Yes, absolutely it does. US citizens have to file a US tax return (and potentially other forms) every year even if they never step into the US. This is different from Canada where filing a tax return is based on residency, not citizenship. This can also affect whether you incorporate or not. Again, these rules get complex fast and if you are not complying with US rules you should talk to your advisor about that right away.
I am moving down to LA and plan to stay there, do I have to keep filing taxes in Canada?
Obviously moving to the US is dependent on immigration issues but assuming you get that figured out (i.e. - you get a green card or multi-year visa) then it is possible to arrange your affairs so that you don't have to file in Canada anymore (which will generally mean less taxes overall). Canada taxes people based on residency and so if you make a true move down to the US and cut your financial and legal ties with Canada, then you won't have to file in Canada anymore. The actual execution of the related tax return in the year that you leave can be complex and again, should be discussed ahead of time with your advisor.