Being self-employed allows you to set your own schedule, with virtually no limits on how much you can earn—but it also means handling your own taxes. Unlike traditional employees, you’re responsible for reporting all your income, claiming deductions, and meeting different tax deadlines.

This can seem confusing, especially if this is the first year you’re self-employed and filing taxes–but don’t worry, we’ve got you covered. In this guide, we’ll explain everything you need to know about filing self-employed taxes in Canada, from key forms to deductions and payment options. We’ll also dive into how you can get some money back when you pay the CRA with your credit card. 

Understanding Self-Employment Taxes in Canada 

Here’s the inside scoop on what you need to know as an independent contractor or self-employed individual during tax season. 

Who Qualifies as Self-Employed or an Independent Contractor?

Being self-employed or an independent contractor means you work for yourself. The Canada Revenue Agency (CRA) considers you self-employed if you operate your own business or work as a freelancer, independent contractor, or sole proprietor rather than an employee of a company. 

If you identify with any of these, you are classified as self-employed:

• Sole Proprietors run their businesses without incorporation and are responsible for all profits, losses, and taxes. 

• Independent Contractors and Freelancers provide services to clients without being on payroll. They generally control their schedule, tools, and methods and are responsible for their taxes, invoices, and expenses. 

• Business Owners and Entrepreneurs run a business, either as a side hustle or a full-time job. They can be classified as a sole proprietorship, incorporated business, or partnership. 

Key Tax Obligations for Self-Employed Individuals 

The main difference between employees and self-employed individuals is that employees get a T4 slip from their employer with taxes deducted from each paycheque. On the other hand, self-employed individuals must make their own estimated tax payments and can deduct business expenses related to their work. 

A few key points to note for self-employed:

• You must report your income on your tax return 

• You need to pay your own CPP contributions (as employees generally split this with their employer)

• You can claim business expenses and tax deductions 

Being an employee and self-employed during the same tax year is also possible. Let’s say you worked at a bakery for 2 months at the beginning of the year, then quit to open your own shop. In this case, you would prepare one tax return including both your regular and self-employed income. 

Self-Employed Tax Forms Canada

As a self-employed person, you’re responsible for reporting your business income and expenses on your personal tax return. You may also want to fill out any of these relevant tax forms: 

Form T2125: Statement of Business or Professional Activities

The T2125 form reports self-employment income and expenses for freelancers, independent contractors, and business owners. 

Who needs to fill it out? 

Anyone who is self-employed and needs to report income and claim business-related expenses. 

Form T4A: Statement of Pension, Retirement, Annuity, and Other Income

The T4A is a tax slip that reports various types of income, including payments to independent contractors, pensions, and self-employed commissions. 

Who needs to fill it out? 

Self-employed individuals who receive payments from clients, or businesses or clients that pay contractors must issue this slip if they pay $400+ in a year. 

Form T5013: Statement of Partnership Income

This form reports a partnership's income, credits, and deductions (a business with two or more owners). 

Who needs to fill it out? 

Partners in a business that operates as a partnership, if they earn over $2 million in revenue or have assets over $5 million. 

Form GST34: Goods and Services Tax/Harmonized Sales Tax (GST/HST) Return

Form GST34 is used to report and remit the GST/HST collected from clients. 

Who needs to fill it out? 

Self-employed individuals and businesses that earn over $30,000 annually and are registered for GST/HST, and businesses that charge and collect GST/HST on sales. 

What is the Tax Return Deadline for Self-Employed? 

The last day to file your taxes as self-employed is June 16, 2025, as June 15th falls on a Sunday. However, any balance owed to the CRA is due on April 30, 2025. 

These due dates differ from regular employees, who must file taxes by April 30, 2025. 

If you don’t file your taxes by the deadline, you may have to pay interest, fees, or penalties. 

What Expenses Can You Claim on Your Tax Return?

No matter how much you earn, you can claim any expenses you might have incurred related to your business. Whether you drive a car to meet clients or work from a home office, you can claim a portion of those expenses when filing your tax return–this will also reduce the taxes you owe. 

Some of the most common tax write-offs for self-employed in Canada include: 

• Home Office Expenses: If you work from home, you can claim a portion of your rent or mortgage interest, home insurance, property taxes, internet and phone bills, home office supplies, and utilities. 

• Office Supplies and Equipment: Laptops, printers, software, subscriptions, stationery, pens, office furniture, etc. 

• Business Use of Your Vehicle: If you use your car for business, you can claim gas and oil, insurance, maintenance, parking and tolls, and lease payments or depreciation. 

• Marketing & Advertising: Business cards, online marketing, website hosting, design fees, flyers, etc. 

• Professional Services: Accountant or bookkeeper fees, legal fees, business coaching fees, etc. 

• Business Meals & Entertainment: You can claim 50% of the cost of meals and drinks when meeting with clients, as well as entertainment expenses. 

• Business Insurance: Liability insurance, E&O insurance, commercial property insurance, etc. 

• Travel Expenses: Taxis, ride-shares, public transportation, and flights and accommodation for business trips. 

• Professional Education & Memberships: Courses, workshops, and certificates related to your work. 

Keep all receipts and invoices throughout the year. It’s a good idea to use a spreadsheet or accounting software to track all your expenses so you’re not scrambling to find everything when filing your taxes. 

How to Calculate Taxes for Self-Employed 

As a self-employed person, you’ll need to report all income and expenses on your personal tax return. The taxes you pay are based on the federal income tax rates and the provincial or territorial tax for where you live. 

The 2024 federal income tax rates for individual income are:

• 15% on the portion of taxable income that is $55,867 or less, and

• 20.5% on the next $55,867 of taxable income up to $111,733, and 

• 26% on the next $111,733 of taxable income up to $173,205, and 

• 29% on the next $173,205 of taxable income up to $246,752, and 

• 33% of taxable income over $246,752

If you lived in two provinces last year, you’d file your income tax return for the province or territory where you lived on December 31st. 

How Much Should I Put Aside for Self-Employment Tax?

Generally, you should set aside 25% to 30% of your income for taxes from each paycheque so that you aren’t caught scrambling during tax season to find the money to pay the CRA. 

More often than not, self-employed individuals will need to pay taxes rather than receive a refund. You’ll need money to cover CPP, federal and provincial income tax, and GST/HST (if you’re registered). 

How to File Your Self-Employed Taxes Online 

Filing your taxes online is the easiest way to go as a self-employed person. Most online tax return software can automatically pull up any tax slips from the CRA issued to you and then walk you through completing your tax return step-by-step. This includes the T1215 form (reporting of business income) and goes through all business-related expenses, which reduce your taxable income. 

Here’s a quick rundown of how you can use tax software to file your taxes online, especially if this is the first year you are self-employed:

1. Gather Your Tax Documents: Make sure you have income records (bank statements, invoices, etc.), expense receipts, tax forms, and GST/HST details (if applicable). 

2. Choose a Certified Tax Software: You’ll need to use CRA-certified tax software to file online (we like TurboTax, Wealthsimple, and UFile). 

3. Log Into Your CRA Account: Register or log into your My CRA Account or My Business Account (if you registered for GST/HST).

4. Complete Your Tax Return: Enter your self-employed income in Form T2125, report any business expenses to claim deductions, and if applicable, complete the GST/HST return. 

5. Submit Your Return via NETFILE: Once completed, submit your return using NETFILE, the CRA’s online tax filing system. 

6. Pay Taxes Owed or Get a Refund: After filing, the CRA will calculate if you owe any taxes or will be getting a return. You can expect to receive a return within 2 weeks of filing. 

How to Pay Your Taxes to the CRA 

You can pay taxes owed to the CRA using several methods; however, we recommend paying your taxes with a credit card to earn points or cashback. Imagine earning travel points you can use for business class flights or hotel upgrades, or cashback to cover several grocery trips. 

All payments made with Chexy Tax fall under a recurring payments category, which means some credit cards give you higher rewards. 

For example, the Scotia Momentum Visa Infinite card earns you 4% cash back instead of the normal 1%. If you pay $8,000 in taxes, you could earn $185.60 back. 

Compared to paying your taxes with online banking, debit card, pre-authorized debit, or any other payment method, using your credit card is the obvious option. Just make sure the card you use will earn you more than the 1.75% fee to make it worth it. 

While you can’t directly pay the CRA with a credit card, you can use Chexy Tax, which allows you to pay any balance owed with only a 1.75% fee, compared to other third-party bill payment companies. 

To pay your taxes with Chexy, follow these simple steps: 

1. Log into your Chexy Dashboard and choose “Pay Income Taxes.” Here, you can make a one-time payment to the CRA or Revenu Quebec. 

2. Choose which type of tax you need to pay, then enter your SIN. 

3. Enter the payment amount. 

4. Follow the steps to verify your identity. 

5. Enter your personal info and credit card details.

6. Your card will be charged, and the amount you owe will be sent to the CRA 3 business days later. *Note that the payment may not appear in your CRA account for up to 7 business days. 

Learn more about how you can pay the CRA with Chexy Tax. 

What Happens If You Don’t Pay on Time?

If you owe taxes and don’t pay on time, you’ll be charged 5% of the balance plus 1% per additional month (up to 12 months). You’ll also pay the prescribed interest rates. 

Getting hit with late fees and interest charges will practically offset any rewards you’ll earn with your credit card, so try your best to pay on time. 

Ready to pay your CRA taxes? Get started with Chexy today. 

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FAQs

What tax filing software is best for self-employed?

TurboTax and Wealthsimple Tax are two top options for filing your self-employed taxes online. TurboTax has a self-employed package starting at $60, and Wealthsimple Tax has a pay-what-you-want filing option where you can pay as little as $0. 

Do self-employed pay CPP?

With a few exceptions, everyone over the age of 18 who works in Canada outside of Quebec and earns more than $3,500 per year must contribute to the Canada Pension Plan (CPP). Those with an employer pay half the required contributions, while self-employed individuals must make the whole contribution. 

Do self-employed individuals need a business number (BN)?

If you incorporate or need a CRA program account, you must get a BN. However, registering for a BN isn't mandatory if you’re a freelancer or gig worker. Learn more about business numbers here. 

How much tax does a small business pay in Canada?

The amount of tax a small business pays depends on many factors, such as the business income, structure, and deductions. In general, sole proprietors pay personal income tax (15% to 33% federal and provincial tax) and incorporated businesses pay 9% to 15% on the first $500k and 15% to 31% on income above that.