Exempt on Tuesday, taxable on Saturday
Music lessons are exempt from GST/HST; performances and DJ sets are taxable. That single split drives three practical answers. First, registration: only taxable revenue counts toward the $30,000 small-supplier threshold, so a teacher who gigs occasionally may legitimately stay unregistered while a DJ with no students crosses the line on bookings alone. Second, invoicing: once registered you add 13% to gigs and merch and nothing to lessons. Third, input tax credits: HST paid on a controller used only for sets comes back in full, while HST on a studio shared between teaching and rehearsing comes back only in proportion to its taxable use.
CRA reviews of mixed-supply businesses tend to start with exactly that apportionment, which is why our returns document the split rather than assert it. If a letter arrives anyway, CRA Audit & Review Support answers it with working papers instead of adjectives.
Where each stream lands on the return
Most working musicians file a T2125 inside the personal return, and placement matters more than volume. Gig fees are professional income. Merch is sales revenue with a cost-of-goods line behind it. Streaming payouts report at the gross the distributor states, converted from US dollars where needed. SOCAN royalties earned from your own working catalogue are business income on the T2125, not the passive royalty line, and that placement carries CPP as self-employed earnings but also builds RRSP room. Lesson income sits beside all of it, exempt for HST but fully taxable for income tax.
Much of this income arrives with no slip at all: door splits, cash gigs, e-transfers from private bookings. It is still all reportable, and CRA's ability to match e-transfer and platform records against filed returns improves every year, so the safe posture is a gross figure that reconciles to your bank and invoices, not to your memory of the summer.
FACTOR and Ontario Arts Council grants are taxable and usually arrive on a T4A. Whether a grant belongs on the T2125 or as other income depends on whether the funded project is part of your professional practice, and the project's eligible costs deduct against it when the return is built correctly. Incorporated acts file a T2 through Corporate Tax Filing; the many players who stay unincorporated run through Personal Tax Filing with the same stream-by-stream discipline. Either way, self-employed filers get until June 15 to file, but any balance still falls due April 30.
Gear is capital, and the class sets the pace
A new controller, a PA stack or an upright bass is not a year-one write-off; it depreciates through capital cost allowance, and the class decides how fast the deduction arrives:
| Gear | CCA class | Rate |
|---|---|---|
| Instruments, amps, PA and lighting | Class 8 | 20% declining balance |
| Laptop and recording computer | Class 50 | 55% declining balance |
| The van that hauls the rig | Class 10 | 30% declining balance |
| Recording software and plugins | Class 12 | 100%, half in the first year |
Used gear earns CCA the same way new gear does, and a trade-in against a new controller reduces the class balance rather than disappearing. Strings, sticks, cartridges, tubes and repairs stay current expenses, deducted in the year you buy them. And one break almost nobody outside music gets: a musician employed on a T4, in an orchestra or a house band, can still deduct instrument maintenance, insurance, rental and CCA against that employment income, one of the few employment expense claims of its kind. Players who hold a day job and gig at night often carry both a T4 and a T2125, and the return has to keep the expenses on the correct side of that wall.
The April file, assembled from a year of statements
A musician's return is built from paper that lands all year: four SOCAN distributions, twelve distributor payouts, a folder of gig invoices, T4A slips for grants and sometimes teaching contracts, and an HST return that must reconcile to the same ledger the income tax return came from. We assemble it once, tie every stream to its source document, and keep the file ready for the year CRA asks about it. If the season was good, quarterly instalments usually follow the assessment; that story, and the planning that softens it, lives on our advisory side. Musicians across Mississauga and the GTA bring us shoeboxes in March. The ones who stay usually leave with a ledger instead.
