Crowdfunding is the process of soliciting donations or contributions through a crowdfunding website. Many people use crowdfunding to raise money for personal purposes ranging from medical bills to vacations, but others turn to crowdfunding to raise startup capital for their businesses. If you accept crowdfunded donations for personal reasons, you typically do not have to report those funds to the Canada Revenue Agency. Conversely, if you use crowdfunding to raise money for your business, you must report those funds as revenue on your tax return.
If you give thank-you gifts or other items to contributors, you may subtract their value from your revenue and report the difference.
If you don’t want to report those funds as income, you may want to consider equity crowdfunding. That is where contributors buy equity in your company through a crowdfunding campaign, and the CRA treats those funds differently.