I'm contracting to publish a game for someone on Apple's App Store. I will take 15% of the revenue, he gets 85%.

But Apple will report the full amount to the government. Let's say for example this title is very popular (unlikely, but for the sake of argument) and earns a million dollars. I get $150,000, but Apple reports that I got a million.

Am I supposed to be in the much higher tax bracket now? Am I able to report the $850,000 as not my income since I just handed it over to the other guy, who would report it as income?

I'm aware I need to consult the tax code, but I'd like to know at least where to start with this. What kind of money is this?

  • 3
    Who exactly will Apple report the income as going to? You personally? A company? Are you part of any kind of company here? – DJClayworth Nov 17 '15 at 10:59
  • Me personally. I do not have a corporate entity set up. – Almo Nov 17 '15 at 15:07
  • There is a type of business called a partnership recognized by the CRA.. cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/menu-eng.html – brian Dec 18 '15 at 18:52

Generally, report your $150,000. If/when the the tax collectors notice the anomaly, they'll attempt to contact you to remedy it. I can't speak for Canada, but in the US, it's pretty orderly. The IRS requests additional information or proof and only open it up into a full blown audit if the suspect wrongdoing. In your case, you could show a business agreement detailing the revenue split proving you correctly reported.

This is only for your consideration. I strongly recommending finding and keeping a professional tax advisor.

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  • "finding and keeping a professional tax advisor." Absolutely. Good starting point, thanks. – Almo Nov 18 '15 at 16:04

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