Taxes for the Self-Employed and Gig Workers

You're the payroll department now

As a sole proprietor — the default setup for most freelancers, contractors, and gig workers — you don't file a separate business tax return. You report your business income and expenses on a form (T2125) that flows into your personal tax return, and the net result gets added to any other income you have, like a T4 job.

The catch is that nothing gets withheld along the way. A regular employee has income tax, CPP, and EI deducted from every paycheque automatically. When you're self-employed, every dollar that hits your account is the full gross amount, and it's on you to set aside a portion for taxes before you spend it.

• Keep business and personal spending in separate accounts, even if it's just a second chequing account - Save receipts and records for at least six years, since the CRA can ask to see them - Track income and expenses as you go rather than reconstructing everything in April

CPP: you pay both halves

Canada Pension Plan contributions are one of the biggest surprises for new freelancers. An employee and employer each pay a share of CPP on the employee's behalf. When you're self-employed, you're both the employee and the employer, so you pay both portions yourself on your net self-employment income.

This roughly doubles the CPP hit compared to what a salaried worker sees taken off their paycheque, and it's calculated and paid through your tax return rather than deducted throughout the year. It's still worth it — those contributions build your CPP retirement benefit — but it needs to be part of what you set aside, not an afterthought.

GST/HST: when you have to register

If your gig or freelance revenue is small, you may not need to charge GST/HST at all. The CRA has a small-supplier threshold based on worldwide revenue over four consecutive calendar quarters; as of 2025 that figure was $30,000, but confirm the current threshold on the CRA website since it applies cumulatively across all your revenue, not just one platform or client.

Once you cross the threshold, you must register, start charging GST/HST on your invoices or sales, and remit what you collect (minus GST/HST you paid on business expenses) to the CRA on a filing schedule they assign you. Some gig-economy platforms have their own rules requiring drivers and couriers to register regardless of revenue, so check the terms of the specific platform you work through.

Deductions that actually apply to you

You can deduct reasonable expenses incurred to earn your business income, which lowers the profit you're taxed on. Common ones for freelancers and gig workers include a portion of home office costs, a portion of vehicle expenses if you drive for work, software and subscriptions, professional fees, supplies, and a portion of your cellphone and internet bill.

The key word is "portion" — if you use your car or your phone for both personal and business purposes, you can only deduct the business-use share, and you need a reasonable method (like a mileage log) to support that split if the CRA asks. Claiming personal expenses as business ones is one of the fastest ways to trigger a review.

Instalments and the two deadlines that trip people up

Self-employed individuals get until June 15 to file their tax return, but any tax you owe is still due by April 30 — file late and you avoid a late-filing penalty, but pay late and you're charged interest from May 1 regardless. Mixing up these two dates is one of the most common self-employment tax mistakes.

If you owe a meaningful amount of tax two years running, the CRA may require you to pay quarterly tax instalments during the year instead of one lump sum at filing time, based on a net-tax-owing threshold that's been around $3,000 in recent years — confirm the current threshold and your specific instalment requirement with the CRA. A practical habit regardless: move a fixed percentage of every payment you receive into a separate savings account the day it lands, so the money for tax, CPP, and any GST/HST is already set aside when it's due.

Frequently asked