But at law, this is regarded as an expense of doing business, a cost of keeping the customer, and is of course, tax deductible.

I find it strange that the learned justice in this case couldn’t see that, regardless of whether her customer paid her directly or ‘gifted’ it, she treats it as an income stream, presumably she pays income tax on it, she uses it to lay her personal expenses.

The only way to conceivably make this woman into an unemployed gift receiver is to turn consultants everywhere into legally unemployed people.

Kind regards,
Justin

Longer reply: You are correct, I am not American, and I’m not even remotely an expert in any nation’s tax laws. I thought though, that a gift cap tax thing you guys have down there was imposed on the donor, not the donee? Incorrect? And also true – our notion of taxable income is a little tighter than yours.

In any case – to address (some of) the rest of your excellent point – governments and courts wind up with a variety of complicated ways of distinguishing “gift” from “income”, because they have also thought of that. If your boss gives you a watch for Christmas – that could be taxable income. (I’m totally serious – that actually happened). The short answer is – there are lots of ways to distinguish gifts from income, and normally it does (as you hypothesize) happen like the other way – like people want it to be a gift, not income. Other people have thought of christmas bonuses, mortgage assistance, interest free loans etc to avoid this.

Certainly in your example of dealing with Fox News – if Fox News went bankrupt and there was doubt about whether you were paid for a service or Fox News gifted you something that was let’s say 20 times over the market rate and the trustee wanted you to disgorge – you would produce those emails and conversations that indicated a single party bidding war that started probably somewhere close to market rate and shot up because your high ethical standards and their intense desire to have you on this project. Had she been able to do that – you may have had a different result – and as I said above, had she been able to produce itemized receipts, a contract, or any normal indicators of income versus gift you may have had a different result – it will turn on the available facts and evidence, but it is objective evaluation – if the parties just declare when an exchange is a “gift” or “income” nobody would (as you point out) ever pay income tax again.

If you are wondering (with the Fox News analogy) if this issue of income versus gift is limited to sex work – no. In fact it will mostly come up NOT regarding sex work. This is a question that comes up all the time when, for example, your boss wants to avoid the deductions for an employee and you want to avoid paying income tax, or when you are about to go bankrupt and then decide it will be a great idea to pay your brother in law $200,000 to mow your lawn. Realistically – would the fact that she is a prostitute attract some extra scrutiny? Almost certainly. But this is not new or groundbreaking law trotted out just for the prostitute, and it isn’t really even a huge misapplication.

That completely confuses me. Here is the US if you get more than $13,000 (I think this is the right amount; it is something around that) from one person within a year, you have to pay taxes. I don’t know if you have to classify it as income per se, but it’s not tax-free just because it’s a “gift.” I’m not sure where you live (Canada?) so maybe it’s different there, but I can’t believe many countries allow people to give huge cash “gifts” to each other without paying taxes. If they did, everyone would go that route instead of declaring their income as income.

Baseball cards and stamps were (my) poor analogy since we’re talking about services. All contractors can make up their rates based on the time and effort involved as well as who their customer is. Lots of non-sex working professionals charge annoying rich people double what they would charge a friend of a friend or for that matter, anyone who is easy and pleasant to work with. Let’s say I’m a website designer and Fox News wants me to revamp their website but I hate Fox News. If they keep upping the offer until they’re promising to pay me 10x what I would normally ask for, and then I finally accept, that’s not a gift from them to me; that’s the only price at which I would do that work for them. People offering services can get away with charging way above the market median. It happens all the time without issue or comment in the straight world with lawyers or publicists or celebrities. Someone wants a certain name attached to whatever they’re doing, so they pay astronomically for it when another person could probably have done the same good work for less. It is still not a gift. If a client I can’t stand wants me to spend a week with only him and I say it would take 50k for that to happen, he is not giving me a gift. Just because I can’t point to other instances where someone I don’t like rented my time for a week doesn’t mean that exchange is invalid.

Baseball cards and old stamps have value because people are willing to pay for them – but the value isn’t set by a single buyer/seller. For example – if she said that he paid her 1.2 million pounds for a common 63 cent postage stamp – nobody would find that to be a compelling argument because he and she agreed, contrary to the opinion of the rest of the world, that was its value. If you are ever going to distinguish gifts and income you have to have some attention to the marketplace outside of the individual. Finding one person to give you 1.2 million for a postage stamp doesn’t create a marketplace; in fact the marketplace says something very different – it creates a particular understanding between two people. As another example – if a customer buys a few dances and pays you $100 and then instead of a generous $25 tip, gives you $10,000 – is this taxable income related to a marketplace (you found someone to pay you $10,100 for a dance!) or is this a gift, the tax implications of which belong to him?

I would say that obviously the $25 would have been income; it is a 25% tip – well established and understood in the marketplace; the $10,000 is so wildly excessive to what the marketplace would have any expectation of, I think you can reasonably claim and expect that is a gratuitous gift. Setting up a marketplace that only deals with two people and has no attention to the value of services in the marketplace around them would pretty much eviscerate the whole notion of “gifts” actually. I’ve received gifts from customers. I do not regard them as income. I may regard them as well deserved – but that is not the same thing.

Ultimately, I’ve decided it’s not my responsibility beyond being ethical about the way I sell dances (not being misleading about the cost or nature of what I do, reminding customers of the time at various points, things like that). “I don’t offer money management as a service at this time…” (And if I was going to offer money management, I’d suppose I’d ask to be paid for the advice, as well! And probably a desk, from management.)

It’s interesting to see a group of sex workers discussing an ethics issue. I’d love to see more of it. 😉

My first and most devoted regular customer was a homeless man who lived in his car. He was highly educated with a post-graduate degree but unemployed/underemployed, and was on a waiting list for Section 8 housing. He’d come into the club once a week or so, get one glass of juice, stay for several hours, and spend between $60 and $200 on me.

It was a weird situation, but I didn’t feel like it was my place to tell him how to spend his money—for more than the obvious selfish reason. If spending time with me, having good conversations, affection and attention was making him happy and less lonely, I can understand why someone would want to do it. I don’t think it’s sex workers’ responsibility to help men budget their money. I would never take advantage of him of course, but as long as I’m being honest I think I’m being ethical.

I was talking to another customer once (a pretty high spender) who said he didn’t like it when strippers thought they were “hustling” men. He found that sentiment degrading and said he knew full well what he was spending his money on; no one was manipulating him.

The fact that the Toys R Us guy was embezzling money makes the situation more complicated, though, but I really feel for that poor woman who ended up working for free. That’s awful.