Self-Employed Taxes in Canada

If you work for yourself — as a freelancer, a contractor, or a sole proprietor — the tax system treats you differently from an employee. There is no employer to withhold tax, no T4 at the end of the year, and you pay both shares of CPP. This guide explains how self-employment income is reported, what expenses can be deducted, the June 15 filing deadline, and instalments. It explains the rules only; it cannot tell you which expenses to claim.

Who counts as self-employed

The CRA considers you self-employed if you operate your own business or work as a freelancer, independent contractor, or sole proprietor, rather than as an employee of someone else. The distinction matters: employees get a T4 and have tax withheld; self-employed people do not.

The CRA looks at the facts — who controls the work, who provides the tools, who bears the risk — not just at what the contract calls you. If you are unsure whether you are an employee or self-employed, the CRA has guidance and a ruling process. Getting it wrong affects CPP, EI, and which expenses you can claim.

The T2125 and business expenses

Business or professional income is reported on Form T2125, Statement of Business or Professional Activities, filed with your T1. The form starts with your gross business income and subtracts your business expenses to arrive at your net business income, which is the amount taxed.

Deductible expenses are the costs of earning the income: a home office (a reasonable share of rent, utilities, and maintenance for the space used for work), vehicle expenses for business travel, supplies, advertising, and professional fees. Personal expenses are not deductible, and mixed expenses must be split on a reasonable basis. Keep receipts and a logbook — the CRA can ask for them years later.

CPP: you pay both shares

Self-employed people pay both the employee and the employer share of CPP, because there is no employer to pay the second half. For 2026 that is 5.95% plus 5.95% — 11.9% in total — on pensionable earnings from $3,500 to $74,600, plus the 4% additional CPP contribution on earnings from $74,600 to $85,000, again on both shares.

Part of the employer share is deductible, and part is claimed as a credit — the T2125 and the tax software handle the split. Self-employed people do not generally pay EI premiums, and cannot usually claim EI regular benefits, though they can opt into EI special benefits (maternity, sickness, and others) by registering with Service Canada.

Deadlines and instalments

Your filing deadline is 15 June — for the 2025 tax year, 15 June 2026 — but any balance owing is due 30 April, and interest starts on 1 May. The deadlines guide explains the penalty and interest rules in full.

The CRA may also ask you to pay quarterly instalments — on 15 March, 15 June, 15 September, and 15 December — if you owed more than the threshold in the current and a prior year. The CRA sends an instalment reminder if so. Paying instalments through the year avoids a large bill in April and avoids instalment interest.

GST/HST: a pointer

If you carry on a business, you may also need to deal with GST/HST — the federal sales tax. Small suppliers under a threshold may not need to register, and registered businesses charge GST/HST on their taxable supplies and claim back the GST/HST they paid on business purchases.

The registration rules, the threshold, and the filing frequency depend on your situation, and this site does not give the threshold figure because it was not re-verified against canada.ca for this build. If you sell goods or services, check the CRA’s GST/HST pages before you decide whether to register. Quebec businesses deal with QST as well.

Sources: Canada Revenue Agency, canada.ca; CRA, Form T2125; CRA, instalments; CRA, CPP rates 2026.