7 Tax Tips for Self-Employed Newcomers to Canada

Newcomers are more likely to be self-employed than people born in Canada. According to 2021 census data, there are over 800,000 self-employed newcomers in Canada. They account for 32% of all business ownerswith paid employees. But newcomers are often less familiar with the Canadian tax system. 

Whether you arrived with entrepreneurial experience or picked up freelance work while building Canadian credentials and connections, here are some important self-employed tax tips you should know. 

Key Takeaways 

• Self-employment income must be reported, even if it’s a side hustle. 
• Your deadline to file is June 15, but your deadline to pay taxes is April 30. 
• You can lower your tax bill by deducting eligible business expenses. 
• Once you earn more than $30,000, you must register for GST/HST. 

1. Know What Counts as Self-Employment Income in Canada 

According to the Canada Revenue Agency (CRA), if you’re doing something with the intention of making a profit, it is considered a business. That means Uber Eats deliveries, freelance design contracts, tutoring, photography gigs, or selling handmade goods online all count as self-employed income. Even occasional income needs to be reported. 

This surprises a lot of newcomers who assume that small or irregular amounts don’t matter. They do. 

If you’re also working a regular job, you’ll have a T4 slip from your employer and self-employment income to report on top of it. Both go on the same tax return, but they’re treated separately. 

2. Your Tax Return Deadlines Are Different 

As a self-employed individual, you have until June 15, 2026, to file your tax return. But any taxes owed are still due by April 30, 2026.  

This is one of the most common points of confusion. The filing deadline and the payment deadline are not the same date. 

The extended filing deadline is useful as it gives you more time to organize your records. But if you owe taxes and haven’t paid by April 30, the CRA charges compound daily interest on the balance starting May 1.

It’s a good idea to track your income throughout the year so you have a rough estimate of what you may owe. If you think you’ll have taxes owing, make a payment by April 30. If you overpay, the CRA will refund the difference after you file. 

3. Set a Portion of Your Income Aside for Taxes 

When you work for an employer in Canada, income tax is deducted from each paycheque automatically. When you’re self-employed, nothing is withheld. The responsibility of setting money aside for taxes falls on you.  

A general rule of thumb: set aside 25–30% of your self-employment income throughout the year. That range is designed to cover federal income tax, provincial income tax, and Canada Pension Plan (CPP) contributions. 

If you also have a salaried job, keep in mind that combining both income streams may push your total earnings into a higher tax bracket. Factor that in when deciding how much to set aside from your self-employment income. 

If you expect to owe more than $3,000 in annual income tax (or $1,800 if you’re in Quebec), and you’ve owed a similar amount in either of the two previous years, the CRA may require you to make quarterly instalment payments. These are typically due on March 15, June 15, September 15, and December 15 each year (or the following business day if these dates fall on a weekend or federal holiday). 

4. Deduct Your Self-Employment Business Expenses 

One of the real advantages of self-employment is the ability to deduct eligible business expenses from your income. This lowers your taxable income and reduces what you owe. 

You must report self-employment income and deductions using Form T2125, the Statement of Business or Professional Activities. Common deductible expenses include: 

• Home office costs, such as a portion of rent or utilities, if you work from home 

• Vehicle expenses, if you use your car for work 

• Advertising and marketing costs 

• Professional fees, such as accountant fees 

• Licence fees, if you’re in a regulated occupation 

• Office supplies and equipment 

If you have a regular job and are self-employed on the side, you can only claim expenses that are directly related to your self-employment work. 

Keep your receipts and invoices for at least six years, as the CRA can request to see your records at any time. A physical or digital folder, with expenses organized by month and category, can be useful both for tax filing and record keeping. 

5. You Must Pay CPP Payments and Cover the Employer’s Share 

In a regular job, your employer deducts Canada Pension Plan (CPP) contributions from your pay and matches that amount before remitting it to the CRA. When you’re self-employed, there’s no employer. You must cover both sides. 

You will typically pay CPP with your taxes. According to the CRA, for the 2025 tax year, the self-employed CPP contribution rate is 11.9% of your net self-employment income, up to a maximum pensionable income of $71,300. This means, for 2025, your CPP contributions can be up to $8,068.20. 

If you also have employment income, CPP contributions will already be deducted from your paycheque. Depending on how close your employment earnings are to the annual earnings ceiling, you may or may not have additional CPP owing on your self-employment income. Your total contributions across both income sources cannot exceed the annual maximum. 

6. You May Need a GST/HST Registration 

If your self-employment income is small, you may not need to register for GST/HST right away. Once your revenue exceeds $30,000 across four consecutive calendar quarters, you must register and start charging GST/HST to your clients. 

Some exceptions apply immediately. Ride-sharing drivers, including those on platforms like Uber and Lyft, must register for GST/HST the moment they begin earning revenue, regardless of how much they make. 

Once registered, you charge GST/HST on top of your fees, collect it, and remit it to the CRA. The upside: you can also claim input tax credits (ITCs) to recover the GST/HST you paid on eligible business expenses. 

If you miss the registration requirement, you will still owe the CRA any GST/HST that should have been collected, even if you never charged it to your clients. Penalties and interest can apply on top of that. It’s worth tracking your income across quarters, not just at year end. 

7. CRA Offers Free Resources for Small Business Owners 

The CRA offers a free Liaison Officer service specifically for self-employed individuals and small business owners. A liaison officer can help you understand eligible deductions, explain bookkeeping basics, flag common filing errors, and answer your questions.  

You can request a meeting through the CRA website, and sessions can be held by phone or videoconference. Meetings are completely confidential and nothing you discuss will be shared with other parts of the CRA. 

For newcomer entrepreneurs navigating the Canadian tax system for the first time, this is a useful starting point. 

Tax Filing as a Self-Employed Newcomer 

Filing taxes as a self-employed person in Canada takes more effort than a standard T4 return. But by building the right habits early, it gets more manageable. The key is to track your income as it comes in, save receipts, and set aside a portion of every payment for taxes. 

If your situation is straightforward, filing on your own using CRA-certified tax software is realistic. If you’re managing multiple income streams, GST/HST registration, or higher income, a tax professional is likely worth the cost. The earlier in the year you start planning, the smoother tax season will go.