Self-employed Canadians pay 25–45% in total taxes on net income (depending on province and income level), plus double CPP contributions. The good news: dozens of deductions can significantly reduce what you owe. Here’s your complete tax guide.
Self-Employment Tax Overview
| Tax | Rate | Notes |
|---|---|---|
| Federal income tax | 15–33% | Same brackets as employees |
| Provincial income tax | 4–25.75% | Varies by province |
| CPP contributions | 11.9% (on $3,500–$68,500) | Both employer + employee share |
| EI premiums | Optional (1.66%) | Voluntary for self-employed |
| GST/HST | 5–15% (collected) | Required if revenue >$30K |
What You Can Deduct
| Deduction | What Qualifies | Limit |
|---|---|---|
| Home office | % of rent/mortgage interest, utilities, insurance | Based on square footage |
| Vehicle | Gas, insurance, maintenance, depreciation | Business-use % only |
| Equipment | Computers, phones, tools | CCA (depreciation) schedule |
| Office supplies | Paper, ink, software subscriptions | Full cost |
| Phone/internet | Monthly bills | Business-use % |
| Professional fees | Accounting, legal, consulting | Full cost |
| Insurance | Business insurance, E&O | Full cost |
| Advertising | Website, online ads, business cards | Full cost |
| Travel | Flights, hotels, meals (50%) | Business purpose only |
| Health/dental premiums | If not covered elsewhere | Full cost for self/family |
| RRSP contributions | Based on earned income | 18% of net income, max $31,560 |
How to Calculate Home Office Deduction
| Expense | Annual Cost | Office % (15%) | Deduction |
|---|---|---|---|
| Rent | $24,000 | 15% | $3,600 |
| Utilities | $3,600 | 15% | $540 |
| Internet | $1,200 | 50% | $600 |
| Home insurance | $1,800 | 15% | $270 |
| Total | $5,010 |
Quarterly Instalments
If you owe more than $3,000 in tax (federal, or $1,800 Quebec), CRA requires quarterly instalment payments:
| Due Date | Quarter |
|---|---|
| March 15 | Q1 |
| June 15 | Q2 |
| September 15 | Q3 |
| December 15 | Q4 |
Tax return filing deadline: June 15 (but taxes owed are due April 30).
GST/HST Guide
| Revenue | Requirement |
|---|---|
| Under $30,000 | GST/HST registration optional |
| Over $30,000 | Must register and collect GST/HST |
Input Tax Credits (ITCs): You can claim back GST/HST paid on business expenses, reducing what you remit to CRA.
Bottom Line
Self-employment taxes in Canada are straightforward once you understand the three layers: income tax, CPP (doubled), and GST/HST. The key to paying less is maximizing deductions — particularly home office, vehicle, and equipment. Keep meticulous records, save 25–30% of every payment for taxes, and consider incorporating once net income exceeds $75,000.
See our how to start a business in Canada or small business grants guide for more.
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