What self-employed Canadians actually owe — double CPP, quarterly instalments, HST registration thresholds, and business expense deductions. Everything you need to file correctly and keep more money.
Employees pay 5.95% CPP and their employer pays another 5.95%. As a self-employed person, you pay both sides — a total of 11.9% on your net self-employment income between $3,500 and $71,300.
The good news: 50% of your CPP contributions are deductible from income on line 22200 of your T1 return — reducing the sting of the employer portion.
If you expect to owe more than $3,000 in federal and provincial income tax (after withholding), CRA requires quarterly instalment payments. Missing instalments results in interest charges at the prescribed rate (currently ~6%).
Self-employed individuals have a June 15 filing deadline (vs. April 30 for employees), but any balance owing is still due April 30. Miss the April 30 payment date and interest begins accruing immediately.
Once your total worldwide taxable revenues exceed $30,000 in any 4 consecutive calendar quarters, you become a "mandatory registrant" and must charge and remit GST/HST. You have 29 days from the day you exceeded the threshold to register.
| Province | Tax System | Rate |
|---|---|---|
| Ontario, NB, NS, NL, PEI | HST | 13–15% |
| Alberta, NT, NU, YT | GST only | 5% |
| BC, MB, SK | GST + PST (separate) | 5% + provincial |
| Quebec | GST + QST | 5% + 9.975% |
Self-employed Canadians can deduct reasonable expenses to earn business income. Key deductible categories:
Deduct a portion of rent, mortgage interest, utilities, internet, and maintenance based on the percentage of your home used exclusively for business. Common formula: business area ÷ total home area × annual housing costs.
Business-use portion of fuel, insurance, maintenance, lease payments, and CCA on the vehicle. Track a mileage log — CRA requires documentation. For 2025, CRA automobile allowance rates: $0.72/km for first 5,000 km; $0.66/km thereafter.
Computers, phones, software subscriptions, and tools used for business. New assets may qualify for Accelerated Investment Incentive (AII) — up to 100% first-year deduction for eligible equipment.
Courses, professional memberships, trade publications, and subscriptions directly related to your self-employment income. Keep all receipts and record the business purpose.
Website costs, advertising, business cards, promotional materials, and a proportionate share of personal social media costs attributable to the business.
Yes — Form T2125 (Statement of Business or Professional Activities) must be filed with your T1 return if you have any self-employment income. Report all business revenues and deductible expenses on T2125. Net income from T2125 flows to line 13500–13700 of your T1 and is subject to income tax and CPP.
You report both. Employment income goes on T4 slips (line 10100). Self-employment income is reported separately on T2125 (lines 13500–13700). CPP contributions are calculated on the combined net earnings — however, your employer already withheld CPP on employment earnings, so you only owe additional CPP on the self-employment portion up to the annual maximum.
You must charge and remit HST once your cumulative taxable revenues in any 4 consecutive calendar quarters exceed $30,000. Until you hit that threshold, you are a "small supplier" and are not required to charge HST (though you can register voluntarily). Once you cross $30,000, register immediately and begin charging the applicable rate in your province.
Yes — RRSP contributions are one of the most powerful tools for self-employed Canadians. Your annual contribution room is 18% of your prior year's earned income (including net self-employment income). Contributions are fully deductible from income, reducing both income tax and the CPP contribution base. This can significantly reduce your April 30 balance owing.
If you have a balance owing and miss April 30, interest begins accruing on the unpaid balance at the CRA prescribed rate from May 1. If you miss the June 15 filing deadline entirely, a late-filing penalty applies: 5% of the balance owing plus 1% per month for up to 12 months. Penalties are significantly higher for repeat late filers. File on time even if you can't pay immediately.
You can pay CRA through: (1) Online banking (add CRA as payee with your SIN as account number); (2) My Payment on the CRA website via Interac; (3) PaySimply for credit card payments (convenience fee applies); (4) At any financial institution. Schedule your instalment payments to arrive by the due date — bank processing times vary.