Everything self-employed Canadians need to know about reporting income, claiming deductions, and staying CRA-compliant.
Yes. The Canada Revenue Agency (CRA) requires you to report all income, regardless of source. Whether you drive for Uber, sell on Etsy, freelance as a writer, or walk dogs on weekends, that income is taxable. It doesn't matter if you received a T4A or not — if money came in, report it.
The good news is that self-employment income also comes with real deductions that can significantly reduce what you owe. Understanding the rules is key to keeping more of what you earn.
Self-employment income is added to your other income (employment, investment, etc.) and taxed at your marginal rate. There is no special flat rate for side hustles.
| Income | Federal Rate |
|---|---|
| $0 – $57,375 | 15% |
| $57,375 – $114,750 | 20.5% |
| $114,750 – $158,519 | 26% |
| $158,519 – $220,000 | 29% |
| Over $220,000 | 33% |
Add your provincial rate on top — combined marginal rates range from about 20% to over 53% depending on province and total income.
Self-employed individuals pay both the employee and employer portions of CPP — effectively double the employee rate. In 2025, the combined self-employed CPP contribution rate is 11.9% on net self-employment income up to the Year's Maximum Pensionable Earnings (~$71,300). CPP2 also applies at 8% on income between ~$68,500 and ~$73,200.
You must register for HST/GST when your total taxable revenue across all self-employment activities exceeds $30,000 in any single calendar quarter or over four consecutive quarters. Until you hit $30,000, you are a "small supplier" and registration is optional.
Once registered, you charge HST on your services and remit it to the CRA. You also get to claim Input Tax Credits (ITCs) on business expenses, which can partially offset what you collect.
Side hustle income is reported on Form T2125 — Statement of Business or Professional Activities, filed with your T1 personal tax return. One T2125 per business activity. You list:
You do not need to be incorporated to file T2125. Sole proprietors and unregistered side hustlers all use it.
Keep all receipts. The CRA can request documentation going back six years.
If you owe more than $3,000 in taxes above what's already withheld at source (or $1,800 in Quebec), the CRA expects you to make quarterly installment payments rather than paying everything at tax time. Installment due dates: March 15, June 15, September 15, December 15.
Failing to pay installments on time triggers interest charges.
Estimate your annual tax owing on side hustle income.
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Self-employment income generates RRSP contribution room (18% of prior year earned income). If you have a high-income year, contributing to your RRSP before the deadline (60 days after Dec 31) can reduce your taxable income significantly. This is one of the most powerful tax levers available to side hustlers without a pension plan.
Consider professional help if: your side hustle revenue exceeds $20,000/year, you have employees or subcontractors, you're unsure about HST registration, you're mixing personal and business vehicle use, or you're considering incorporation. A good accountant pays for themselves in tax savings.
This page is for informational purposes only and does not constitute tax or legal advice. Consult a CPA or tax professional for your specific situation. Tax rules change annually — verify with the CRA or a tax advisor.