Self-employment in Canada offers significant tax flexibility but also comes with unique obligations. Unlike employees who have taxes withheld automatically, self-employed individuals must track income and expenses, pay both halves of CPP, register for HST if revenues exceed $30,000, and potentially make quarterly tax instalments. This guide covers everything self-employed Canadians need to know.
If you or your spouse or common-law partner are self-employed, your tax return filing deadline is June 15, 2025 for the 2024 tax year. However, any balance of tax owing must still be paid by April 30, 2025 to avoid interest charges. This split deadline means you can file later, but you should estimate and pay your balance by April 30 regardless.
Self-employment income is reported on Schedule T2125 (Statement of Business or Professional Activities) of your T1 return. You report your gross revenues and then subtract eligible business expenses to arrive at your net business income, which is added to your other income for tax purposes.
One of the greatest advantages of self-employment is the ability to deduct legitimate business expenses:
As a self-employed individual, you pay both the employee and employer portions of Canada Pension Plan (CPP) contributions — effectively double what an employee pays. For 2024, the combined self-employed CPP contribution rate is 11.9% of net self-employment earnings between the basic exemption ($3,500) and the Year's Maximum Pensionable Earnings ($68,500). The maximum self-employed CPP contribution in 2024 is $7,735.
The good news: you can deduct half the CPP paid as a deduction on your tax return (not just a credit), which partially offsets this significant expense.
If your business revenues exceed $30,000 in a single calendar quarter or over four consecutive quarters, you are required to register for and collect GST/HST from your clients. Even below $30,000, you can voluntarily register to claim input tax credits on business purchases.
Once registered, you collect HST from clients (5% GST in Alberta, MB, SK, QC; 13–15% HST in other provinces), and remit the net amount to the CRA after deducting input tax credits on business expenses. HST returns are typically filed annually for small businesses.
If your net tax owing after withholdings exceeds $3,000 federally (or $1,800 in Quebec) for both the current year and either of the two previous years, the CRA will ask you to pay quarterly tax instalments. Instalment dates are March 15, June 15, September 15, and December 15. Failing to pay instalments on time results in instalment interest charges.
Business assets with a useful life of more than one year (computers, vehicles, equipment) are not deducted immediately but depreciated over time using the CCA system. Different asset classes have different depreciation rates. The Accelerated Investment Incentive allows enhanced first-year deductions for eligible property purchased after November 20, 2018.
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