Self-Employed Taxes in Canada: What You Owe and When

What counts as self-employment income

You are self-employed when you earn business or professional income on your own account, rather than as an employee. That includes freelancers, consultants, contractors, gig workers, and anyone running a sole proprietorship or a partnership. If a client pays you without issuing a T4, and you set your own hours and tools, you are most likely self-employed.

The CRA taxes this income on your personal return. A sole proprietorship is not a separate taxpayer, so your business profit is simply added to your other income for the year. A corporation is different: it files its own T2 return, which we cover briefly at the end.

How self-employed taxes work in Canada

You report your business revenue and expenses on Form T2125, Statement of Business or Professional Activities. The form produces your net business income, which goes on your T1 return with your other income. You then pay federal and provincial income tax at your marginal tax rate, just like any other income.

Two things change compared with a salaried job. First, no tax is withheld at source, so the full amount comes due when you file, unless you pay instalments during the year. Second, you pay CPP or QPP contributions on your net self-employment income, at double the employee rate.

To see what your profit might cost in income tax, try our income tax calculator. It gives a quick estimate by province before you sit down with the T2125.

CPP contributions when you are self-employed

An employee and their employer each pay 5.95% of pensionable earnings to the Canada Pension Plan. When you are self-employed, you pay both shares, for a total of 11.9%. On top of that, the second additional contribution (CPP2) applies to earnings between the first and second ceilings.

The CRA publishes these 2026 values:

• Maximum pensionable earnings: $74,600
• Basic exemption: $3,500
• Maximum self-employed CPP contribution: $8,460.90
• Second ceiling (CPP2): $85,000
• Self-employed CPP2 rate and maximum: 8%, up to $832

You calculate your contributions on Schedule 8 when you file. The CRA lets you deduct part of what you pay on line 22200 of your return, and you claim the base portion as a non-refundable tax credit on line 31000. In practice, your tax software does this split for you.

QPP and QPIP in Quebec

If you live in Quebec, you contribute to the Quebec Pension Plan (QPP) instead of the CPP. Retraite Québec sets the 2026 rate at 6.3% for employees, which means 12.6% for self-employed workers on earnings up to $74,600. Between $74,600 and $85,000, a second self-employed rate applies, identical to the CPP2 rate.

Quebec self-employed workers also pay Québec Parental Insurance Plan (QPIP) premiums on their net self-employment income. According to the Government of Quebec, the 2026 figures are:

• Self-employed QPIP rate: 0.764%
• Maximum self-employed premium: $786.92
• Maximum insurable earnings: $103,000

You calculate your QPP and QPIP amounts on your Revenu Québec return, not on your federal return.

Optional EI special benefits

Self-employed people do not pay regular Employment Insurance (EI) premiums. You can, however, sign an agreement with Service Canada to access special benefits such as maternity, parental, and sickness benefits. Once you opt in, Service Canada sets the 2026 premiums as follows:

• Outside Quebec: $1.63 per $100 of earnings, up to $1,123.07
• In Quebec: $1.30 per $100 of earnings, up to $895.70

You pay these premiums once a year with your tax return. Quebec residents already get parental benefits through QPIP, which explains the lower rate.

Filing and payment deadlines

Self-employed individuals, and their spouse or common-law partner, have until June 15 to file their return. The payment deadline does not move, however. Any balance owing is due April 30, and the CRA charges interest on unpaid amounts after that date.

For the 2025 tax year, those deadlines were April 30, 2026 for payment and June 15, 2026 for filing. For your 2026 return, the same rules give April 30, 2027 for payment and June 15, 2027 for filing. Revenu Québec applies the same two dates to the Quebec return.

Tax instalments: who pays and when

Because nobody withholds tax from your business income, the CRA may ask you to pay during the year. You must pay instalments for 2026 when both conditions apply:

1. Your net tax owing for 2026 is more than $3,000, or more than $1,800 if you live in Quebec.
2. Your net tax owing in either 2025 or 2024 was also more than that threshold.

The CRA sets four instalment dates: March 15, June 15, September 15, and December 15. Self-employed farmers and fishers make a single instalment by December 31 instead. If you live in Quebec, Revenu Québec runs its own instalment system for Quebec tax, with the same four dates and an $1,800 threshold.

The CRA mails instalment reminders based on your history, but the obligation exists even if you do not receive one. Paying too little or too late can trigger instalment interest.

GST/HST and QST registration

You must register for the GST/HST once you stop being a small supplier. The CRA's test looks at your worldwide taxable supplies: if they exceed $30,000 in a single calendar quarter, or over the last four consecutive calendar quarters, you must register and start charging tax. Below that threshold, registration is optional.

In Quebec, Revenu Québec applies the same $30,000 small supplier test to the QST, and it administers both the GST and the QST for most Quebec businesses. Our guides to the GST and the HST explain how each tax works. To estimate what you collect and remit, use our GST/HST calculator or, in Quebec, our GST and QST calculator.

Common deductible business expenses

You can deduct expenses you incur to earn business income, as long as they are reasonable. When an expense is partly personal, such as a phone plan or a car, you deduct only the business share.

Keep receipts and a simple log for anything mixed-use. A separate account makes this easier, which is why many freelancers ask whether they need a business bank account. Fees on that account can also count: see whether business bank fees are tax deductible.

Set money aside every month

The biggest trap for new freelancers is spending the whole payment. Your client pays you gross, and the tax and CPP or QPP bill arrives later. A simple habit works: move a share of every payment into a savings account reserved for taxes.

To size that share, run your expected profit through our take-home pay calculator. If you are still setting your prices, our hourly rate calculator shows what you need to charge to cover taxes, contributions, and unpaid time. Bookkeeping tools also help, and we compare the best bookkeeping software for self-employed Canadians.

When incorporating makes sense

As your profit grows, a corporation can let you leave money in the company and pay yourself through salary, dividends, or both. It also adds costs: a separate T2 return, corporate bookkeeping, and often an accountant. The answer depends on your income, your province, and how much you need to live on.

Our incorporation calculator compares the two structures, and the salary vs dividend calculator shows how to pay yourself once you incorporate. Talk to a tax professional before you make the switch.

Conclusion

Self-employed taxes in Canada come down to five habits. Track your revenue and expenses for the T2125, budget for both halves of CPP or QPP, watch the $3,000 instalment threshold ($1,800 in Quebec), register for the GST/HST when you pass $30,000, and pay any balance by April 30 even though you can file until June 15. Every figure above is current as of October 20, 2026 and changes each January, so check the CRA before you file.

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Frequently asked questions about self-employed taxes