ℹ️ Self-employed CPP is 11.9% (employee + employer share). Half is deductible as a business expense. Verify with CRA or an accountant.
What's different about self-employed taxes?
As a self-employed Canadian, you pay taxes differently than an employee in three key ways:
1. You pay both sides of CPP. Employees pay 5.95% and their employer pays another 5.95%. As self-employed, you pay both — 11.9% total on net earnings between $3,500 and $71,300. The good news: the employer half (5.95%) is deductible as a business expense.
2. No employer withholds tax. Nothing is deducted at source — you receive your full invoice payment. This means you owe a large amount at tax time unless you make quarterly installments throughout the year.
3. You don't pay EI. Self-employed Canadians are not required to pay EI premiums and therefore can't claim regular EI if work dries up. You can opt in voluntarily for access to special benefits (maternity, parental, illness leave).
Common self-employment deductions
🏠
Home Office
If you use part of your home exclusively for business — proportional rent, utilities, internet, maintenance.
🚗
Vehicle Expenses
Business portion of fuel, insurance, maintenance, lease payments. Keep a mileage log.
💻
Equipment & Software
Computers, phones, cameras, tools, software subscriptions used for business.
📋
Professional Fees
Accountant, lawyer, consultant fees paid for your business. Also professional memberships.
📣
Advertising & Marketing
Website costs, social media advertising, business cards, promotional materials.
📚
Training & Education
Courses, books, and training directly related to your current business activities.
Frequently Asked Questions
When do I need to register for GST/HST?
You must register for GST/HST when your total worldwide taxable revenues exceed $30,000 in a single calendar quarter or over four consecutive quarters. Once registered, you collect GST/HST from clients and remit it to CRA, minus any input tax credits you claim on business purchases.
When are quarterly installments required?
CRA requires quarterly installments if your net tax owing (after all deductions and credits) is more than $3,000 in the current year and either of the two previous years. Installment due dates are March 15, June 15, September 15, and December 15. Missing installments results in interest charges.
Can I deduct CPP contributions from my taxes?
Yes — partially. The employer portion of your CPP (5.95% of net earnings) is deductible as a business expense, which reduces your net income before calculating tax. The employee portion generates a non-refundable federal tax credit (15% of the contribution). Our calculator accounts for both.
What is the tax filing deadline for self-employed?
Self-employed Canadians (and their spouses) have until June 15 to file their T1 tax return — two months later than the regular April 30 deadline. However, any balance owing is still due by April 30. Filing late but paying on time means no late-filing penalty, just interest on any unpaid balance.
Should I incorporate instead of being a sole proprietor?
Incorporation can save significant tax when your net income consistently exceeds $100,000+, because the small business corporate tax rate (9% federal) is much lower than personal rates. Below that threshold, the costs and complexity of incorporation often outweigh the benefits. Consult an accountant when your self-employment income is consistently high.