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I am employed full time as a software developer. If I wish to earn money on the side doing Wordpress websites through Odesk, Elance, etc., I will report that to the CRA under other income. Is this other income also taxed at the marginal rate?

  • Why is it depressing? Price your work accordingly. – littleadv Sep 18 '13 at 21:25
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Yes, this extra income would be taxed at your marginal rate because it is increasing your total income. This does not necessarily apply to all income, however. Capital gains are taxed at a different rate.

Depending on the amount of extra work, you may wish to consider setting up a corporation. Corporations are taxed entirely differently. This would also give you the opportunity to write off far more of your expenses, but be aware of double taxation.

Investopedia has a good article on double taxation. The issue is that the corporation must pay taxes on the revenue and then, when you take out the money either as salary or dividends, you personally will pay tax. It may leave you better off, even with the double taxation. Dividends are taxed at a lower rate than your marginal tax rate, generally. And you can write off much more inside a corporation. If considering this, talk to an accountant and discuss your expected revenue from consulting. The accountant should be able to quantify the costs and benefits.

  • Thank you. Can you elaborate more on the double taxation? – Victor123 Sep 20 '13 at 14:19
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    @Kaushik, done. I'm not all that knowledgeable, but hopefully my explanation points you in the right direction. – ChrisInEdmonton Sep 20 '13 at 14:28

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