The gig economy is growing in Canada and around the world. Talk to your friends and family and it may seem like more and more people have side hustles like selling crafts, creating monetizable content, driving for a rideshare company or consulting. Some people may even be able to support themselves full-time as a freelancer.
Being self-employed also can come with tax headaches. Reporting self-employment income is much more complex than regular employment. In addition to claiming tax credits and write-offs, you also need to determine your HST obligations, and your profit/loss statements.
Read on to learn more about what you need to know if you have self-employment income.
- Income you earn is taxable
While this may seem obvious, it’s important to remember that any income you earn while self-employed is taxable. This means that on top of completing your standard personal tax forms, you are legally required to report your self-employment income and expenses to the Canada Revenue Agency (CRA). However you can also lower your tax owing by claiming all your eligible costs. Be sure to keep your receipts!
- Earn over $30,000? Don’t forget the HST!
If you earn over $30,000 of revenue you must collect and remit sales tax. Sales tax will depend on your location and you must remit these amounts to the CRA monthly, quarterly or annually.
- Tax filing deadlines
Self-employed individuals have until June 15th to file their taxes. However the CRA begins to assess interest on unpaid amounts starting in May. For incorporated businesses, T2 returns are due six months after the end of your fiscal year (e.g., if your fiscal year ends December 31, your return would be due June 30).
- Claim Tax Deductible Expenses
Claiming eligible business expenses is the most effective way of saving money come tax time. Make sure you are taking full advantage of tax write-offs available to you as a self-employed person. Click here for more information.