2026 Year-End Tax Checklist for Self-Employed Canadians

Why You Need a Year-End Checklist

Self-employed Canadians do not have an employer deducting taxes, contributing to CPP, or organizing T4 slips. Every piece of your tax filing is your responsibility. Miss a deadline and CRA charges interest. Forget a deduction and you overpay. Lose a receipt and you cannot defend an audit.

This checklist breaks the year-end process into four phases — October through March — so you tackle each task when it matters, not all at once in a panic on April 29.

Phase 1: October-November — Pre-Year-End Preparation

Do not wait until January. The biggest tax savings come from decisions you make before December 31. Use October and November to review your numbers and plan.

Bookkeeping Catch-Up

• Reconcile all bank accounts and credit cards through October 31
• Categorize every uncategorized transaction from the past 10 months
• Match receipts to transactions — flag any missing receipts and obtain duplicates now
• Verify that income from all platforms (Uber, DoorDash, freelance clients) matches your bank deposits
• Separate personal and business expenses in any shared accounts

If your bookkeeping is months behind, this is the time to catch up. Reconciling 10 months of transactions in January alongside document gathering is a recipe for missed deductions. For a system to prevent this next year, see our bookkeeping guide for gig workers.

Financial Review

• Run a profit and loss report for January through October
• Compare revenue to the prior year — flag any significant changes
• Review your expense categories against T2125 lines to ensure nothing is miscategorized
• Identify large one-time expenses that may qualify for CCA instead of immediate deduction
• Check if your gross revenue has crossed the $30,000 GST/HST threshold

Tax Planning Before Year-End

• Estimate your net business income for the full year
• Calculate your estimated income tax and CPP owing using the CRA's tax calculator
• Determine your RRSP contribution room (check your latest Notice of Assessment)
• Plan RRSP contributions — every dollar you contribute reduces your taxable income dollar-for-dollar
• Consider purchasing business equipment or supplies before December 31 to claim the expense in the current tax year
• If you have a spouse, evaluate income-splitting strategies such as spousal RRSP contributions

Phase 2: December — Year-End Close

December is about finalizing your books. Every number you lock down now is one less thing to chase in February.

Final Reconciliation

• Reconcile all bank accounts and credit cards through December 31
• Record any outstanding invoices as accounts receivable
• Record any unpaid bills as accounts payable
• Reconcile your mileage logbook — calculate your total business kilometres and total kilometres driven
• Verify your business-use percentage for vehicle, home office, and phone

Capital Cost Allowance (CCA) Review

• List all assets purchased during the year (computers, vehicles, equipment, furniture)
• Assign each asset to the correct CCA class
• Calculate CCA for each class using the correct rate and the half-year rule (Accelerated Investment Incentive may apply)
• Decide whether to claim the full CCA amount or carry it forward — this is optional and strategic
• Record the closing undepreciated capital cost (UCC) for each class

Business-Use Percentages

• Calculate home office business-use percentage (dedicated office square footage divided by total home square footage)
• Finalize vehicle business-use percentage from your mileage logbook
• Determine phone and internet business-use percentage
• Document the basis for each percentage — CRA will ask during an audit

GST/HST Year-End Tasks

• Reconcile GST/HST collected on all invoices
• Total all Input Tax Credits (ITCs) on business expenses
• If your filing period ends December 31, prepare your GST/HST return
• Set aside the net GST/HST owing (collected minus ITCs) in a separate account

For full ITC rules, see our GST/HST guide for small business.

Phase 3: January — Document Gathering

January is collection month. You are waiting for slips and statements while organizing what you already have.

Tax Slips and Statements

• Collect T4A slips from all clients who paid you $500 or more (due to you by February 28)
• Collect T5 slips for any investment income
• Download annual income summaries from all gig platforms (Uber, DoorDash, Lyft, Uber Eats, Instacart)
• Download all 12 monthly bank statements for business accounts
• Download all 12 monthly credit card statements for business cards
• Print or export your bookkeeping reports: profit and loss, expense summary by category, GST/HST summary

Receipt Organization

• Verify you have receipts for all expenses over $50
• Organize receipts by T2125 category (advertising, vehicle, office, supplies, professional fees, etc.)
• For missing receipts: request duplicates from vendors, or use bank/credit card statements as backup documentation
• Ensure all digital receipt images are legible — re-scan any that are blurry or faded
• Back up your receipt archive to a second location (cloud storage or external drive)

Mileage Log Finalization

• Verify your mileage logbook covers all 12 months
• Calculate total kilometres driven during the year
• Calculate total business kilometres
• Compute business-use percentage: business km / total km
• Cross-reference your logbook against fuel receipts and maintenance records for consistency

If you drive for Uber or delivery platforms, see our detailed guide on Uber driver tax deductions for mileage-specific rules.

Phase 4: February-March — T2125 Preparation and Filing

This is where everything comes together. You have your books closed, documents collected, and now you complete your T2125.

T2125 Section-by-Section Checklist

• Part 1 — Enter your business name, address, NAICS code, and fiscal year-end (usually December 31)
• Part 2 — Enter gross business income on Line 8000 from your income summary
• Parts 3-6 — Complete only if you sell physical products (cost of goods sold)
• Part 7 — Enter each expense category with totals from your bookkeeping
• Part 8 — Enter CCA calculations from your December review
• Part 9 — Enter total vehicle expenses, business-use percentage, and calculate the deductible amount
• Part 10 — Enter home office expenses and business-use percentage
• Part 11 — Calculate net business income (Line 9946) — this flows to your T1

For a complete walkthrough of every T2125 field, see our T2125 form guide.

Calculate Your Tax Owing

• Transfer net business income to your T1 personal return (Line 13500)
• Calculate CPP contributions on self-employment income (both employee and employer portions)
• Apply all non-refundable tax credits (basic personal amount, CPP, medical expenses)
• Subtract any tax already paid through instalments
• Determine final balance owing or refund

File Your Returns

• File your GST/HST return for the period ending December 31 (if applicable)
• File your T1 personal tax return including the T2125
• Pay any balance owing by April 30 to avoid interest
• Set up CRA direct deposit for refunds if you have not already
• Save a copy of your filed return and all supporting documents

Key Dates and Deadlines

Do not rely on memory. Put these dates in your calendar now.

Common Mistakes That Cost Money

These are the errors CRA sees most often from self-employed filers. Each one either triggers penalties or leaves money on the table.

Not separating business and personal expenses. If CRA cannot distinguish business expenses from personal spending, they can disallow entire categories of deductions. Use a dedicated business bank account and credit card. If you have not done this yet, start now for next year.

Missing the mileage logbook. CRA requires a logbook to support vehicle expense deductions. Without one, your entire vehicle deduction — often the largest deduction for gig workers — can be denied. A logbook does not need to be fancy. Date, destination, kilometres, and purpose for every trip.

Forgetting to claim CCA. Capital Cost Allowance is optional in any given year, but many self-employed Canadians forget to claim it entirely. If you bought a computer, vehicle, or equipment for your business, you are likely entitled to CCA deductions.

Claiming 100% business use on shared assets. Your phone, vehicle, and home office are almost certainly used for both personal and business purposes. CRA expects a reasonable business-use percentage. Claiming 100% without documentation is an audit trigger.

Not making RRSP contributions. Self-employed income is fully taxable. An RRSP contribution directly reduces your taxable income. If you have contribution room, use it before the March deadline.

Ignoring GST/HST ITCs. If you are registered for GST/HST, every business expense that includes GST/HST is partially recoverable. Failing to claim ITCs means you overpay. Track them throughout the year, not just at filing time.

Paying taxes late while filing on time. The June 15 filing deadline creates a false sense of security. Interest on unpaid tax starts May 1. If you owe money, pay by April 30 even if your return is not ready — you can always amend later.

For 13 more bookkeeping practices that prevent these mistakes, see our bookkeeping tips for self-employed Canadians.

How to Automate Year-End With AI Bookkeeping

The hardest part of this checklist is not the filing — it is having clean books to file from. If your bookkeeping is current, year-end close takes a few hours. If it is months behind, it takes weeks.

AI bookkeeping tools eliminate the catch-up problem by automating the work throughout the year:

Receipt scanning and categorization. Photograph receipts as you get them. AI extracts the vendor, date, amount, and tax, then categorizes the expense to the correct T2125 line automatically. No manual data entry. No shoebox of receipts in January.

Bank transaction matching. Import bank and credit card statements. AI matches transactions to receipts, flags duplicates, and identifies uncategorized spending. Your reconciliation is mostly done before you open the books.

GST/HST tracking. Every receipt scanned has the GST/HST amount extracted and separated. At year-end, your ITC total is already calculated.

Business-use percentage application. Set your vehicle and home office percentages once. The tool applies them across all relevant expenses automatically.

T2125-ready reports. Export your expenses organized by T2125 line — ready to enter into your tax software or hand to your accountant.

The goal is not to replace your accountant. It is to hand them clean, organized, complete records instead of a box of receipts and a prayer. That saves you money on accounting fees, maximizes your deductions, and removes the year-end panic entirely.

Frequently Asked Questions

What happens if I miss the June 15 filing deadline?

CRA charges a late-filing penalty of 5% of your balance owing, plus 1% for each additional month you are late, up to 12 months. If you have filed late before, the penalties double to 10% plus 2% per month. Even if you cannot pay the full amount, file on time to avoid the filing penalty — you can arrange a payment plan with CRA for the balance.

Do I need to file a T2125 if I lost money this year?

Yes. Filing a T2125 with a net loss allows you to deduct that loss against other income on your T1 return, reducing your overall tax bill. If you had employment income, investment income, or spousal income, the business loss offsets it. Skipping the T2125 when you have a loss means leaving money on the table.

Can I do my own taxes or do I need an accountant?

Many self-employed Canadians file their own taxes using certified software like Wealthsimple Tax, TurboTax, or StudioTax. If your business is straightforward — one income source, simple expenses, no inventory — self-filing is entirely reasonable. Consider hiring an accountant if you have complex CCA calculations, multiple businesses, significant vehicle or home office deductions, or if CRA has flagged you for review. The cost of an accountant ($200-$600) often pays for itself in deductions you would otherwise miss.

How far back can CRA audit my self-employment income?

CRA can reassess your return up to three years after your original Notice of Assessment for most situations. However, if they suspect fraud, gross negligence, or misrepresentation, there is no time limit. This is why you keep all records — receipts, bank statements, mileage logs, contracts — for at least six years. Digital records stored in bookkeeping software count, as long as the original receipt images are retained and legible.