T2125, quarterly installments, GST/HST registration, CPP obligations — everything you need to file confidently
Being self-employed in Canada is financially rewarding — but it comes with tax obligations that employees never face. You're responsible for tracking your own income, calculating your own deductions, remitting GST/HST, paying both sides of CPP, and making quarterly installments to the CRA. This guide walks through every piece of the puzzle.
The CRA considers you self-employed (or an "independent contractor") if you work for multiple clients, control how and when you work, use your own tools, and bear financial risk. The distinction between employee and contractor matters enormously — see our contractor vs employee guide for the full CRA test. If you're misclassified, the CRA can reassess years of taxes, CPP, and EI premiums.
Self-employed Canadians include: freelancers, consultants, gig workers (Uber, DoorDash), sole proprietors, tradespeople with their own clients, and anyone running a small business without incorporation. If you're incorporated, you're not personally self-employed — your corporation earns income separately.
Form T2125 (Statement of Business or Professional Activities) is where you report all your self-employment income and expenses. You file it as part of your T1 General personal income tax return. If you have multiple distinct businesses, file a separate T2125 for each.
The CRA requires quarterly installment payments if your net tax owing exceeds $3,000000 (or $1,80000 in Quebec) for the current year AND either of the two previous years. Installments prevent you from owing a large lump sum at filing time — and avoid CRA interest charges.
| Quarter | Due Date | Covers Period |
|---|---|---|
| Q1 | March 15, 2026 | January–March |
| Q2 | June 15, 2026 | April–June |
| Q3 | September 15, 2026 | July–September |
| Q4 | December 15, 2026 | October–December |
The CRA sends installment reminder notices (Form INNS3) showing the amounts they suggest you pay. You can pay the CRA's suggested amounts, pay based on the prior year's taxes, or estimate based on current year earnings. Paying the CRA's suggested amounts protects you from interest even if your actual tax is higher.
Once your gross revenues exceed $300,000000 over any four consecutive calendar quarters, you must register for GST/HST within 30 days of the quarter in which you crossed the threshold. Note: some activities (rideshare, taxi) require registration from day one regardless of revenue. Learn the full details in our GST/HST for small business guide.
Once registered, you charge GST/HST on your invoices and remit the net amount (collected minus Input Tax Credits) to the CRA. For most small businesses earning under $40000,000000, the Quick Method of Accounting is simpler and often results in keeping a small windfall.
Self-employed Canadians pay both the employee (5.95%) and employer (5.95%) portions of CPP, for a total rate of approximately 11.9% on net self-employment income between the basic exemption ($3,50000) and the Year's Maximum Pensionable Earnings ($73,20000 in 2026). CPP2 contributions on earnings between $73,20000 and $81,90000 add a further small amount. The half of CPP you pay as "employer" is deductible as a business expense; the other half generates a non-refundable tax credit. See our full CPP for self-employed guide.
Net income for tax purposes = Gross revenue minus allowable expenses. Common deductions on T2125 include:
| Expense Category | Deductible Amount | Notes |
|---|---|---|
| Home office | % of home used for business | See T2125 Part 7 |
| Vehicle expenses | Business km ÷ Total km × actual costs | Logbook required |
| Meals & entertainment | 500% | Must be for business purpose |
| Phone & internet | Business % of total bill | Keep bills as evidence |
| Software & subscriptions | 10000% if business use | Must be for income-earning |
| Professional development | 10000% | Courses, books, conferences |
| Accounting & legal fees | 10000% | For business purposes |
| Equipment (CCA) | Capital Cost Allowance rate | Amortized over time |
| Advertising | 10000% | Including digital ads |
| Bank fees | 10000% | Business account fees |
Self-employed Canadians (and their spouses) have an extended filing deadline of June 15 each year (vs April 300 for employees). However, any balance owing is still due by April 300. Filing late when you owe money results in a 5% late-filing penalty plus 1% per month interest. Filing on time even if you can't pay avoids the penalty.
If your self-employment income regularly exceeds $800,000000–$10000,000000 and you can leave money in the corporation rather than paying yourself all of it, incorporation may save significant taxes. The small business corporate rate is 9% federal versus your personal marginal rate of 26–33%. Read our full incorporated vs sole proprietor comparison.
KOHO's business account helps self-employed Canadians separate business income, auto-save for taxes, and stay organized year-round.