Self-Employment and Gig Work Taxes in Canada

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Helina Tadesse March 16, 2025

Taxes can feel a little more complicated when you’re self-employed or working in the gig economy. Unlike regular employees, you don’t have taxes automatically deducted from your paychecks. Instead, you’re responsible for reporting your income and paying taxes yourself. But don’t worry—this guide will break it all down into simple steps so you can stay on top of your taxes and avoid costly mistakes.

How to Report Your Income

As a freelancer, Uber driver, or gig worker, you need to report all the money you earn, even if you don’t receive a T4A slip. This includes:

• Payments from clients or customers

• Tips or bonuses

• Income from platforms like Uber, DoorDash, or Fiverr

Keep track of your earnings throughout the year using spreadsheets, apps, or accounting software. When tax season comes, you’ll report your total income on your tax return using Form T2125 (Statement of Business or Professional Activities).

Tax Deductions You Can Claim

One of the perks of being self-employed is that you can deduct many of your business expenses, which lowers your taxable income. Here are some common deductions:

• Home office expenses: If you work from home, you can claim a portion of rent, utilities, and internet.

• Vehicle expenses: For gig workers like Uber drivers, you can deduct gas, maintenance, and insurance based on the percentage of business use.

• Supplies and equipment: Things like laptops, software, or tools you use for work.

• Advertising and marketing: Costs for promoting your services.

• Professional fees: Accounting or legal services related to your business.

Always keep receipts and records of your expenses—they’re your proof if the Canada Revenue Agency (CRA) asks for them.

GST/HST Registration

If your self-employment income exceeds $30,000 in a 12-month period, you must register for a GST/HST number and start charging your clients or customers GST/HST. Once registered, you’ll need to file regular GST/HST returns and remit the taxes you collect to the CRA.

Even if you earn less than $30,000, you can still register voluntarily. This allows you to claim GST/HST paid on your business expenses, which can save you money.

How to Pay Your Taxes

Since taxes aren’t deducted from your income, you’ll need to set aside money throughout the year to cover your tax bill. Here’s how it works:

• Quarterly tax installments: If you owe more than $3,000 in taxes for the year, the CRA may require you to make installment payments in March, June, September, and December.

• Annual tax payment: If you don’t owe enough to require installments, you’ll pay your taxes in one lump sum when you file your return.

To avoid surprises, calculate your estimated taxes and save a portion of your income (around 20-30%) in a separate account.

Common Mistakes to Avoid

Here are some pitfalls to watch out for as a self-employed or gig worker:

1. Not tracking expenses: Without proper records, you could miss out on valuable deductions.

2. Underreporting income: Even if you don’t get a T4A, all income must be reported.

3. Missing deadlines: Late filing or payments can result in penalties and interest charges.

4. Ignoring GST/HST rules: Failing to register or remit GST/HST when required can lead to fines.

5. Not setting aside money for taxes: Without savings, you might struggle to pay your tax bill.

Being self-employed or working in the gig economy comes with unique tax responsibilities, but it doesn’t have to be overwhelming. Keep detailed records, track your income and expenses, and set aside money for taxes throughout the year. If you’re unsure about anything, don’t hesitate to seek help from a tax professional. By staying organized and filing on time, you can avoid penalties and focus on growing your business.