If you're self-employed in Canada, tax season can feel like trying to climb a mountain without a map. Between tracking income, organizing receipts, and figuring out what forms go where, it's easy to feel overwhelmed.

But here's the good news: filing self-employment taxes in Canada is more straightforward than you might think—and understanding the process can actually help you run a smarter, more profitable business.

This guide walks you through everything you need to know about filing taxes as a self-employed Canadian. We'll cover: 

• How to report your business income and expenses using Form T2125
• How to calculate and remit CPP or QPP contributions
• Which deductions you can claim to reduce your tax bill 

We'll also break down GST/HST obligations, instalment payments, and record-keeping best practices so you can file with confidence.

And if you're using Wave, you'll see how easy it is to track your business income, organize expenses, and generate tax-ready reports that make filing faster and more accurate.

What counts as self-employment for tax purposes in Canada?

Let's start with the basics. Self-employment in Canada means you're earning business or professional income as an unincorporated individual. You're not running a corporation—you're simply working for yourself. This applies to freelancers, independent contractors, consultants, tradespeople, content creators, and anyone earning income through gig platforms like Uber, DoorDash, Etsy, Shopify, or Fiverr.

Here's what makes self-employment different from traditional employment: there's no separate business tax return. Instead, you report your self-employment income on your T1 General personal tax return, using Form T2125 (Statement of Business or Professional Activities) to detail your business earnings and expenses.

You don't need to formally incorporate your business to be considered self-employed. But you are responsible for tracking your income and expenses, charging and remitting GST/HST when required, and making tax installment payments if you owe enough tax.

The CRA treats your business income as part of your total taxable income. That means if you also have a part-time job with a T4, your self-employment earnings get added to your employment income when calculating how much tax you owe.

Step-by-step: How to file self-employment taxes in Canada

Ready to tackle your taxes? Follow these six steps to file your self-employment taxes like a pro:

1. Gather your business records

Before you can fill out any forms, you need to know what you earned and what you spent. That means collecting all your income records, like invoices, contracts, platform statements from Uber or Etsy, PayPal deposits, and e-transfer confirmations.

Next, round up your expense receipts. These include everything from office supplies and software subscriptions to vehicle costs, meals with clients, and internet bills. The more organized your records, the easier it is to claim every deduction you're entitled to.

Wave’s Pro Plan makes this step a breeze. Connect your bank accounts and credit cards, and Wave automatically pulls in your transactions. Categorize your income and expenses as you go, and store digital copies of receipts in the cloud. When tax season rolls around, you'll have everything you need in one place.

2. Complete Form T2125

Form T2125 is where you report your business or professional income and expenses. It's broken into several sections:

• Gross income: Total revenue from your business activities.
• Cost of goods sold (COGS): If you sell physical products, you'll deduct the cost of inventory here.
• Business expenses: This is where you list deductible expenses like advertising, meals and entertainment, vehicle costs, office supplies, software, professional fees, and business-use-of-home expenses.

When you subtract your total expenses (and COGS, if applicable) from your gross income, you get your net self-employment income. That's the number you'll transfer to your T1 return.

Take your time with this form. Double-check your math, make sure expenses are categorized correctly, and keep supporting documents in case the CRA asks for them later.

3. Include net self-employment income on your T1 Return

Once you've completed Form T2125, you'll transfer your net self-employment income to Line 13500 of your T1 General return. This amount gets added to any other income you earned during the year, like employment income from a T4 or investment income.

Your total taxable income determines which federal and provincial tax brackets you fall into, so accurate reporting is key.

4. Calculate and pay CPP/QPP contributions

Here's where self-employment gets a little tricky. When you're employed by someone else, your employer pays half of your CPP contributions and you pay the other half. But when you're self-employed, you're responsible for both portions.

You'll use Schedule 8 (or the provincial equivalent if you're in Quebec) to calculate your CPP or QPP contributions based on your net self-employment income. If you also have T4 employment income, the CRA coordinates your contributions so you don't overpay.

These contributions aren't optional—they help fund your retirement benefits through the Canada Pension Plan. The good news? Half of your CPP/QPP contributions are deductible, which reduces your taxable income.

5. Make quarterly Installment payments (If required)

If you owed more than $3,000 in net tax last year (the threshold is different in Quebec), you'll likely need to make quarterly installment payments. The CRA sends installment reminders with due dates and suggested amounts.

Why installments? Because self-employed people don't have taxes withheld from their paycheques like employees do. Instead, you're expected to pay income tax and CPP/QPP contributions throughout the year. Missing installment deadlines can result in interest charges, so it's important to stay on top of them.

Set aside a portion of your income each month to cover your tax obligations. Wave can help you track cash flow and see how much you should be saving for taxes.

6. Work with a professional (Optional)

You don't have to go it alone. If you're unsure about any part of the filing process, working with a tax professional can save you time, reduce stress, and help you maximize deductions.

Wave Advisors, our in-house experts, offer two services designed for self-employed Canadians:

• Bookkeeping support: Get an in-house bookkeeper to categorize and reconcile your transactions on a monthly basis, so your books are clean and tax-ready all year long.
• Accounting coaching: Book a live 1-on-1 session with an accounting professional who can walk through your books, provide recommendations, and give you confidence heading into tax season.

Block Advisors also offers a range of small business tax filing services, including year-end tax filing readiness, year-round tax planning, and small business tax consulting. Work with a certified tax pro to organize your documents, find opportunities for credits and deductions, and get individualized care throughout the year.

Key tax deductions for self-employed Canadians

One of the biggest perks of self-employment? You can deduct business expenses to reduce your taxable income. Here are the most common deductions Canadian self-employed individuals can claim.

1. Business use-of-home (Home office)

If you work from home, you can deduct a portion of your rent, utilities, internet, and other household costs based on the percentage of your home used for business. For example, if your home office takes up 10% of your home's total square footage and you use it exclusively for business, you can deduct 10% of eligible expenses.

Keep documentation to support your claim: floor plans, utility bills, and records of how much time you spend working from home.

2. Office supplies and equipment

Pens, paper, printer ink, computers, monitors, keyboards, and business software are all deductible. Just make sure you're using them for business purposes.

If you buy a big-ticket item like a laptop or desk, it may be considered a capital asset. In that case, you'll claim Capital Cost Allowance (CCA) to deduct a portion of the cost over several years.

3. Phone and internet

If you use your cell phone or home internet for business, you can deduct the business-use percentage. For example, if you use your phone 60% of the time for work, you can deduct 60% of your monthly bill.

Document your method for calculating the percentage and keep your bills on file.

4. Vehicle expenses

Do you drive to meet clients, pick up supplies, or deliver products? You can deduct vehicle expenses based on the percentage of business use. Track your kilometres in a logbook and keep receipts for fuel, insurance, maintenance, repairs, and parking.

You can either claim actual expenses (like gas and insurance) or use a per-kilometre rate provided by the CRA. Choose the method that gives you the bigger deduction.

5. Professional services

Bookkeeping, accounting, legal, and consulting fees related to your business are fully deductible. If you're paying for tax prep, business coaching, or legal advice, keep those receipts—they'll help lower your tax bill.

Common filing mistakes self-employed Canadians should avoid

Even the most organized self-employed people can make mistakes. Here are the most common ones to watch out for:

• Not registering for GST/HST when required: If your gross revenue exceeds $30,000 over four consecutive quarters, you're required to register for a GST/HST account and start charging tax on your sales.
• Mixing business and personal expenses: Keep separate bank accounts and credit cards for your business. Mixing personal and business transactions makes it harder to track deductions and raises red flags with the CRA.
• Failing to track smaller expenses: Every dollar counts. Don't skip over small purchases like coffee with a client or parking fees—they add up.
• Missing tax installment deadlines: Late installments result in interest charges. Set calendar reminders and automate payments if possible.
• Filing late or inaccurately due to poor records: The CRA can reassess your return or charge penalties if your records are incomplete or inaccurate. Stay organized year-round.

Wave’s Pro Plan helps you avoid these mistakes by auto-categorizing transactions, storing receipts in the cloud, and generating tax-ready reports you can hand to your accountant or use to file yourself.

How Wave simplifies tax filing for self-employed Canadians

Wave is built for small business owners and solopreneurs—not accountants—so it's designed to be simple, intuitive, and stress-free.

Automatic expense categorization

Wave maps your transactions to CRA-aligned categories from Form T2125, so you don't have to guess where each expense belongs. Just review, approve, and move on.

Invoicing and payments

Send professional invoices and accept payments online, and Wave automatically matches deposits to your income. No more spreadsheets or guesswork.

Tax-ready reports

Export clean income statements, categorized expenses, and receipt information in minutes. Whether you're filing yourself or working with an accountant, Wave gives you everything you need in one place.

Cloud storage for receipts and records

The CRA requires you to keep business records for at least six years. Wave stores your receipts and documents in the cloud, so they're searchable, organized, and always accessible.

FAQs about self-employment taxes in Canada

What forms do I need as a self-employed person in Canada?

‍You'll need your T1 General personal tax return and Form T2125 to report business income and expenses. You may also need Schedule 8 to calculate CPP/QPP contributions and GST/HST forms if you're registered.

Do I need to register for GST/HST, and when does it take effect?

You must register for a GST/HST account if your gross revenue exceeds $30,000 over four consecutive calendar quarters. Once registered, you'll start charging GST/HST on taxable sales and remit it to the CRA on a regular basis.

How do I calculate CPP/QPP contributions if I also have T4 income?

‍The CRA coordinates your CPP/QPP contributions between your employment and self-employment income using Schedule 8. You won't pay more than the annual maximum, even if you have both types of income.

Where do I report my income on the T1?‍

Your net self-employment income from Form T2125 goes on Line 13500 of your T1 General return.

Can I carry losses forward to future years?

‍Yes. If your business expenses exceed your income and you end up with a loss, you can carry that loss forward to reduce taxable income in future years, or carry it back to offset income from previous years.

File your taxes with confidence

Filing self-employment taxes in Canada means reporting your business income on your T1 return, using Form T2125 to detail earnings and expenses, calculating CPP/QPP contributions, and staying on top of GST/HST and installment obligations. It sounds like a lot, but with good records and the right tools, it's totally manageable.

Wave helps Canadian self-employed individuals stay organized, track expenses, and generate tax-ready reports, so tax time is less stressful and more empowering. You'll spend less time crunching numbers and more time doing what you love: growing your business.

Ready to take control of your finances? Try Wave free today and see how much easier tax season can be.