What Freelancers and Side Hustlers Need to Know About Taxes in Canada

Making money on your own terms feels great—until tax season hits. Whether you're freelancing full-time or flipping sneakers on the side, once you earn more than a few hundred bucks, the CRA considers it taxable income. Here's what you need to know to avoid surprises and keep more of what you earn.

1. Yes, You Need to Report It

If you’re making money through freelance work, a side gig, or a cash hustle—it’s all self-employment income, and the CRA wants their cut.

This includes:

• Freelance writing, design, photography

• Uber, DoorDash, Instacart driving

• Selling on Etsy, eBay, Facebook Marketplace

• Consulting, tutoring, pet-sitting, and more

  
  

There’s no minimum threshold. Even a few hundred bucks should be reported if it’s income, not a one-time sale of personal stuff.

2. You’re Responsible for Your Own Taxes

Unlike a regular job, no taxes are deducted from your freelance or side hustle income. You’ll need to:

• Track income and expenses

• File a T2125 Statement of Business Activities

• Pay taxes owing—federal, provincial, and possibly CPP contributions

  
  

Depending on how much you make, this could mean a hefty bill in April if you don’t plan ahead.

Tip: Set aside 25% to 30% of every payment you receive to cover taxes and CPP.

3. You Can Claim Business Expenses

Good news: you don’t get taxed on your total income—just your net income (income minus expenses).

Common deductible expenses:

• Internet and cell phone (portion used for business)

• Office supplies and software

• Home office (if you qualify)

• Equipment (laptop, camera, tools, etc.)

• Vehicle costs (gas, insurance, mileage—if used for business)

• Marketing, advertising, and subscriptions

  
  

Keep receipts. The CRA doesn’t need them with your return, but you must have them if audited.

4. GST/HST Registration: Do You Need It?

If you earn $30,000 or more in a 12-month period from self-employment, you must register for a GST/HST number and start charging tax.

If working for ride-sharing services such as Uber or Lyft, you must register immediately.

You’ll need to:

• Collect GST/HST from clients (based on your province)

• File regular GST/HST returns

• Remit what you collected (minus eligible tax credits)

  
  

Even if you earn less than $30K, you can register voluntarily to claim input tax credits on business expenses. But only do this if you understand the added paperwork.

5. Keep It Organized—Or Pay for It Later

Don’t rely on memory or a pile of receipts in April. Use a system:

• Spreadsheet (Google Sheets works)

• Accounting tools like Wave, QuickBooks, or FreshBooks

• Track income, expenses, mileage, and invoices monthly

The better your records, the easier your life will be at tax time (or if the CRA comes knocking).

6. When to Consider a CRA My Business Account

If you're earning consistently and registered for GST/HST, it helps to have a CRA My Business Account to:

• View account balances and filings

• Submit GST/HST returns

• Receive CRA messages or notices

• Set up direct deposit for refunds

7. Hiring Help: Is It Worth It?

If your taxes are simple, you can use TurboTax, Wealthsimple Tax, or UFile to file with self-employment income.

But if:

• You’re making over $30K consistently

• You have complex deductions or multiple income streams

• You want to save time and avoid errors

Then it’s worth hiring a tax pro. A qualified accountant can save you more in taxes than they cost.

Bottom Line

Freelancing and side hustles come with freedom—but also tax responsibilities. Track your income, save for taxes, claim your deductions, and know when to register for GST/HST. Staying ahead of your taxes means fewer headaches and more money in your pocket.