How to File Taxes as a Self-Employed Canadian (2026): Step-by-Step

Filing Season Is Open. Here Is Exactly What to Do.

CRA opened the 2026 filing season on February 23. If you earned any self-employment income in 2025 — freelancing, consulting, driving for Uber, delivering for DoorDash, running a side hustle, or operating a sole proprietorship — you need to file a tax return that includes Form T2125.

This is not a "general overview." This is the step-by-step playbook. Every form, every deadline, every action item, in order.

You have roughly 9 weeks until your tax payment is due on April 30. You have about 16 weeks until the filing deadline on June 15. That sounds like plenty of time. It is not. The people who owe penalties every year also thought they had plenty of time.

Let us fix that.

Key Dates You Cannot Afford to Miss

Put these in your calendar right now. Not after you finish reading — right now.

The Self-Employed Tax Filing Timeline

Here is what the next four months look like, phase by phase.

Each step below maps to this timeline. If you are reading this in late February, you should be working on Steps 1 and 2 simultaneously.

Step 1: Gather Your Documents (January — February)

Before you touch a tax form, you need every piece of paper and every digital record that proves what you earned and what you spent. CRA does not accept "I think it was about $3,000." They want documentation.

Income Documents

• T4A slips — Clients who paid you $500 or more should issue a T4A by the end of February. Check CRA My Account after March 1 if any are missing.
• Platform income summaries — Uber, Lyft, DoorDash, Uber Eats, Instacart, and similar platforms provide annual summaries. Download them from each platform's driver/courier portal. Do not wait for them to email you.
• Invoices and contracts — If you invoice clients directly, compile every invoice from 2025. Your total invoiced amount should match (or be close to) your bank deposits.
• Bank statements — Download all 12 monthly statements for every business bank account and credit card. These are your backup if any income records are missing.
• PayPal, Stripe, and other payment processors — Download annual summaries from every platform where you received payments.

Expense Documents

• Receipts — Every business expense needs a receipt. Digital photos count. If you have been scanning receipts throughout the year, you are ahead of most filers. If not, gather what you can and use bank statements as backup for anything under $50.
• Mileage logbook — If you used a personal vehicle for business, you need a log showing date, destination, purpose, and kilometres for every business trip. CRA requires this to support your vehicle expense deduction. No logbook means no deduction.
• GST/HST records — If you are registered for GST/HST, compile your collected amounts and your Input Tax Credits (ITCs). See our GST/HST guide for exactly what counts.
• Home office measurements — If you claim a home office deduction, you need the square footage of your workspace and the total square footage of your home. You also need records for rent (or mortgage interest), property tax, utilities, and home insurance.
• Asset purchase records — Any equipment, computers, vehicles, or furniture purchased for business in 2025. These may qualify for Capital Cost Allowance (CCA) deductions.

If you drive for Uber or delivery platforms, check our guides on Uber driver tax deductions and DoorDash and Uber Eats deductions for platform-specific documents you need.

Step 2: Organize Your Expenses (February — March)

You have the documents. Now categorize every expense so it maps directly to a line on Form T2125. This is where most self-employed Canadians waste time — because they try to do it all at once in April instead of building a system.

Categorize by T2125 Line Number

Every deductible business expense has a specific line on Form T2125. When your expenses are already organized by line number, completing the form takes minutes instead of hours.

For the complete line-by-line breakdown, see our T2125 form guide.

Separate Business From Personal

This is non-negotiable. If you used a personal credit card for business purchases, go through every statement and tag the business expenses. If you used a business card for personal purchases, tag those too.

CRA auditors look for exactly this: mixed expenses claimed at 100% business. A $1,200 annual phone bill claimed entirely as a business expense when you also use the phone for personal calls is a red flag. Calculate an honest business-use percentage — 60%, 70%, whatever is accurate — and apply it.

The same applies to your vehicle, your home internet, and your home office. Document why your percentage is what it is. "I use my phone approximately 70% for business based on my call log and app usage" is defensible. "100% business" with no documentation is not.

Calculate Business-Use Percentages

You need a specific, documented percentage for every shared asset:

• Vehicle — Business kilometres divided by total kilometres from your mileage logbook
• Home office — Dedicated office square footage divided by total home square footage
• Phone — Estimate based on business call time, data usage, or number of business apps
• Internet — Same percentage as home office is usually reasonable, or calculate based on usage

Write these percentages down. You will need them for the T2125 and again if CRA ever asks.

For a deeper system to keep expenses organized year-round, see our bookkeeping tips for self-employed Canadians and bookkeeping guide for gig workers.

Step 3: Complete Form T2125 (March — April)

Form T2125 — Statement of Business or Professional Activities — is the heart of your self-employed tax return. It flows into your T1 personal return and determines both your income tax and CPP contributions.

We have a complete, line-by-line walkthrough in our T2125 form guide. Here is the summary of what each section covers:

Key Things to Get Right

Part 2 — Income. Report your gross business income on Line 8000. This is your total revenue before any deductions. If you collected GST/HST, do not include that amount here — it goes on your GST/HST return, not the T2125.

Part 7 — Expenses. Enter each category total from the table in Step 2. Double-check that you are not duplicating vehicle or home office expenses here — those belong in Parts 9 and 10.

Part 8 — Capital Cost Allowance. If you purchased a computer ($55% per year in Class 50), furniture (20% in Class 8), or a vehicle (30% in Class 10 or 10.1), you can depreciate the cost over multiple years instead of deducting it all at once. CCA is optional in any given year — but do not forget it exists.

Part 9 — Vehicle Expenses. Total your vehicle costs (fuel, insurance, maintenance, lease or loan interest, licence, registration), multiply by your business-use percentage, and enter the result. The limits for 2026: $900/month maximum for lease payments, $300/month maximum for loan interest, $36,000 maximum vehicle cost for CCA purposes.

Part 10 — Home Office. Multiply eligible housing costs (rent or mortgage interest, property tax, utilities, insurance, maintenance) by your business-use percentage. Home office expenses cannot create or increase a business loss — any excess carries forward to the next year.

Part 11 — Net Income. This is the number that matters. Total income minus total expenses equals your net self-employment income on Line 9946. This amount flows to Line 13500 on your T1 personal return.

For the full section-by-section walkthrough, including NAICS codes, CCA class tables, and common errors, see the complete T2125 guide.

Step 4: Handle GST/HST

GST/HST is separate from your income tax return. If you are registered, you file a GST/HST return in addition to your T1.

Do You Need to Register?

You must register for GST/HST if your gross business revenue exceeded $30,000 in any rolling four-quarter period. Once you cross that threshold, you have 29 days to register.

If you are under $30,000, registration is optional. But voluntary registration lets you claim Input Tax Credits (ITCs) on your business expenses — effectively recovering the GST/HST you paid. For many self-employed Canadians, voluntary registration saves money. Run the numbers.

Filing Your GST/HST Return

If you are registered with an annual filing period ending December 31, your GST/HST return is due April 30, 2026 — the same day your income tax balance is due.

The calculation:

1. GST/HST collected — Total GST/HST you charged clients on invoices
2. Input Tax Credits (ITCs) — Total GST/HST you paid on business expenses
3. Net amount — Collected minus ITCs. If positive, you owe CRA. If negative, you get a refund.

For complete registration steps, ITC rules, Quick Method calculations, and filing instructions, see our GST/HST guide for small business.

Step 5: Calculate and Pay What You Owe

Once your T2125 is complete, the net income flows to your T1 personal return. Here is how your tax bill is calculated.

Income Tax

Your net self-employment income is added to any other income (employment, investment, rental) to determine your total taxable income. Federal tax rates for 2025 (which you file in 2026):

Provincial tax is added on top, varying by province. In Ontario, the combined marginal rate on the first bracket is about 20.05%. In British Columbia, it is about 20.06%. In Alberta, 25%.

CPP Contributions

Self-employed Canadians pay both the employee and employer portions of CPP. For 2025:

• CPP contribution rate: 11.9% (5.95% employee + 5.95% employer)
• Maximum pensionable earnings: $71,300
• Basic exemption: $3,500
• Maximum CPP contribution: $8,068.20

If your net self-employment income is $60,000, your CPP contribution is approximately ($60,000 - $3,500) × 11.9% = $6,723.50. This is on top of your income tax. Budget for it.

There is also CPP2 (Canada Pension Plan 2) for 2025, which applies an additional 8% on earnings between $71,300 and $81,200 — both portions totalling an extra $792 maximum.

How to Pay CRA

• CRA My Account — Online banking payment through your financial institution, linked to your CRA account
• Pre-authorized debit — Set up through CRA My Account to pay automatically on a specific date
• At your bank — Use the remittance voucher from your Notice of Assessment
• By mail — Cheque payable to the Receiver General for Canada (allow 5+ business days for delivery)

Pay by April 30. Not April 29 at 11:59 PM. CRA processes payments by the date they receive them, not the date you send them. If you are paying online, the transaction usually posts same-day. If paying by cheque, mail it by April 20.

What About Instalments?

If you owed more than $3,000 in net tax for 2025 (or for 2024), CRA expects you to pay quarterly instalments for 2026. The instalment dates are March 15, June 15, September 15, and December 15.

CRA will send you an instalment reminder with the suggested amounts. You can calculate your own instalments based on your expected 2026 income. Failing to pay instalments results in instalment interest — which compounds.

Step 6: File Your Return

You have three options for filing your T1 (including the T2125):

Option 1: NETFILE (Self-Filing)

Use CRA-certified tax software to complete your return and submit electronically. NETFILE is the fastest way to file. Common certified software:

• Wealthsimple Tax — Free, handles T2125
• TurboTax — $30-$50 for self-employed version
• StudioTax — Free desktop software
• H&R Block Online — Free basic, paid for self-employed features

NETFILE confirmation is immediate. You will see your assessment within 1-2 weeks.

Option 2: Through an Accountant

Give your accountant your organized records (from Steps 1-3), your completed or partially completed T2125 numbers, and any T4A slips and platform summaries. They will prepare and EFILE your return on your behalf.

Cost: $200-$600 for a straightforward self-employed return. More if your situation is complex (multiple businesses, rental income, investment portfolios).

Option 3: Paper Filing

Mail your completed T1 and T2125 to your regional CRA tax centre. This is the slowest option — processing takes 4-8 weeks. Only do this if you have no other choice.

Tips for First-Time Self-Employment Filers

1. Do not panic. The forms look intimidating but the process is logical: add up income, subtract expenses, calculate tax.
2. Use software. Tax software walks you through each T2125 field and does the math. You do not need to calculate tax brackets manually.
3. File even if you cannot pay. The late-filing penalty is separate from and additional to interest on unpaid tax. Filing on time and paying late is strictly better than filing late and paying late.
4. Set up CRA My Account now if you have not already. You can view your Notice of Assessment, check RRSP room, see your instalment schedule, and confirm that CRA received your return.
5. Keep copies of everything. Your filed return, all T4A slips, all receipts, bank statements, and mileage logbooks — keep them for six years.

Common Mistakes That Cost You Money

These are the errors that either trigger CRA penalties or leave deductions unclaimed. Every one of them is avoidable.

Filing Late

The June 15 deadline gives self-employed Canadians an extra six weeks compared to employees. But the penalty for missing it is brutal: 5% of your balance owing plus 1% for each additional month you are late, up to 12 months. If you filed late in a prior year, CRA doubles it to 10% plus 2% per month. On a $5,000 tax bill, filing two months late costs you $350-$700 in penalties alone — before interest.

Missing Deductions

The average self-employed Canadian underestimates their deductions. Common ones that get missed:

• Vehicle expenses — especially if you did not keep a mileage logbook
• Home office — many filers skip this because they think it is complicated (it is not)
• Capital Cost Allowance — depreciation on your computer, equipment, or vehicle
• Phone and internet — the business portion is deductible
• Professional development — courses, books, conferences related to your business
• Software subscriptions — every tool you pay for to run your business

For the complete list, see our guide to small business tax deductions in Canada.

Not Keeping Records

CRA requires you to keep all business records for six years after the tax year they relate to. That means your 2025 records must be retained until at least 2031. If CRA audits you and you cannot produce receipts, they can disallow the deductions — even if the expenses were legitimate.

Digital records are acceptable. Photographed receipts, PDF bank statements, and bookkeeping software exports all count. The key is that they must be legible and organized. A folder of 800 blurry photos is technically "records" but will not help you in an audit.

Mixing Personal and Business Expenses

Using one bank account and one credit card for everything — personal and business — is the single most common bookkeeping mistake. It makes every step harder: categorization, reconciliation, calculating business-use percentages, and defending an audit.

Open a separate business bank account. Get a separate credit card for business expenses. This takes 30 minutes and saves dozens of hours every tax season. For the full argument and more bookkeeping fundamentals, see our 13 bookkeeping tips.

Forgetting CPP Contributions

Employees see CPP deducted on every paycheque. Self-employed Canadians see nothing — until they calculate their tax return and discover they owe $4,000-$8,000 in CPP on top of income tax. Budget for it. Set aside 25-30% of your self-employment income throughout the year into a dedicated tax savings account. For year-round planning, our year-end tax checklist breaks this into monthly habits.

Not Paying Instalments

If CRA sends you an instalment notice, pay it. The amounts are based on your prior-year tax owing. Ignoring instalments does not defer your tax — it just adds interest charges. If your income is lower this year, you can calculate reduced instalments based on your estimated 2026 income, but you must still pay something on each due date.

How AI Bookkeeping Eliminates the Tax-Season Scramble

The reason tax filing is painful for most self-employed Canadians is not the forms. It is the state of their books. If your receipts are organized, your expenses are categorized, and your income is reconciled, completing the T2125 takes an afternoon. If your books are months behind, it takes weeks.

AI bookkeeping tools solve this by automating the work throughout the year:

• Receipt scanning — Photograph a receipt and AI extracts the vendor, date, amount, tax, and category. No manual data entry. No shoebox of crumpled paper.
• Automatic categorization — Expenses are mapped to T2125 line numbers as they are recorded. At tax time, your numbers are already organized by CRA category.
• Bank statement matching — Import transactions and let AI match them to receipts, flag duplicates, and identify missing records.
• GST/HST tracking — ITCs are calculated automatically from every scanned receipt.
• Tax-ready reports — Export your expenses by T2125 line, ready to enter into tax software or hand to your accountant.

The goal is not to replace professional tax advice. It is to give you (or your accountant) clean, organized, complete records instead of a pile of receipts and guesswork. That means more deductions claimed, fewer errors, and zero panic in April.

For more on how AI is changing bookkeeping, see our guide to AI bookkeeping for small business.

Frequently Asked Questions

What is the tax filing deadline for self-employed Canadians?

Self-employed Canadians (and their spouses) have until June 15 to file their T1 tax return. However, any balance owing must be paid by April 30 to avoid interest charges. The extended filing deadline does not extend the payment deadline.

Do I need an accountant to file my self-employed taxes?

Not necessarily. If you have a single business, straightforward expenses, and no complex tax situations, certified tax software like Wealthsimple Tax or TurboTax can handle the T2125 and T1 filing. An accountant is worth the investment if you have multiple businesses, significant CCA calculations, complex vehicle or home office deductions, or if you have been flagged for CRA review. The cost ($200-$600) often pays for itself in deductions you would have missed.

What happens if I file or pay late?

If you pay late (after April 30), CRA charges daily compound interest on the unpaid amount at the prescribed rate. If you file late (after June 15), CRA adds a late-filing penalty: 5% of your balance owing plus 1% for each additional full month you are late, up to 12 months. Repeated late filing doubles the penalty to 10% plus 2% per month. Filing on time but paying late is always better than doing both late — you avoid the filing penalty entirely.

How do I pay CRA?

The easiest method is through CRA My Account using online banking. You can also set up pre-authorized debit, pay through your bank using a remittance voucher, or mail a cheque to the Receiver General for Canada. For online payments, the funds typically post same-day. For cheques, allow at least 5 business days before the April 30 deadline.

What if I forgot to report some income?

File a T1 Adjustment Request (T1-ADJ) through CRA My Account or by mail. CRA's Voluntary Disclosures Program may waive penalties if you come forward before they contact you. Do not ignore unreported income — CRA cross-references T4A slips, platform payment data, and bank deposit information. They will find the discrepancy eventually, and the penalties for being caught are significantly worse than self-correcting.

What if I earned very little from self-employment — do I still need to file?

Yes. There is no minimum income threshold for reporting self-employment income. Even if you earned $500 from a side project, it must be reported on a T2125. The upside: if your business had expenses that exceeded income, you can claim the net loss against your other income and reduce your overall tax bill. Skipping the T2125 because the amount is small means you also skip any loss deduction you are entitled to.

Can I deduct expenses from a previous year that I forgot to claim?

Yes. You can file a T1 Adjustment Request for any of the previous 10 tax years to claim missed deductions. CRA will reassess your return and issue a refund if applicable. This is one of the most overlooked opportunities — if you have been self-employed for several years and never claimed CCA on your vehicle or computer, you may be owed thousands in refunds. Gather the documentation and file the adjustment.

Your Next Steps

You now have the complete playbook. Here is the compressed version:

1. This week: Gather all income documents, T4A slips, and platform summaries (Step 1)
2. By mid-March: Organize and categorize all expenses by T2125 line number (Step 2)
3. By early April: Complete your T2125 and T1 return using tax software or an accountant (Steps 3-6)
4. By April 30: Pay any balance owing to CRA
5. By June 15: Confirm your return is filed

Do not wait. Every week you delay is a week closer to the deadline with the same amount of work ahead of you. The cost of procrastination is not just stress — it is real dollars in penalties and interest, and real dollars in deductions you miss because you are rushing.

Start with Step 1. Open your bank statements. Download your platform summaries. Pull out the receipt folder. The hardest part is starting. Everything after that is just following the steps.

For more detailed guidance on specific topics, explore our related guides:

• T2125 Form: Complete Guide
• GST/HST Guide for Small Business
• Year-End Tax Checklist
• Uber Driver Tax Deductions
• DoorDash and Uber Eats Deductions
• Bookkeeping for Gig Workers
• 13 Bookkeeping Tips for Self-Employed Canadians
• AI Bookkeeping for Small Business
• Small Business Tax Deductions in Canada