Self-employed & gig income
Nobody withholds tax for you, nobody remits your CPP, and the first year is where most of the damage happens. Three things get you through it: set money aside, keep records, and know the two thresholds.
Higher above roughly $100,000. The reason it's more than an employee pays on the same money: you owe both halves of CPP — 11.9% on pensionable earnings between $3,500 and $74,600, plus 8% on the CPP2 band up to $85,000, a combined maximum of $9,292.90 for 2026. Half of it is deductible, but all of it is due.
The two numbers that change your obligations
Once taxable revenue passes $30,000 over four consecutive calendar quarters you stop being a small supplier and must register, charge 13% in Ontario, and file returns. Some register voluntarily below the threshold to recover input tax credits on start-up costs — worth doing when your clients are businesses, rarely when they're consumers.
Once your balance owing tops $3,000 in the current year and in either of the two prior years, the CRA expects quarterly instalments — March 15, June 15, September 15 and December 15. Paying the amounts on their reminder protects you from instalment interest even if your year ends up bigger.
What's deductible
The test is whether the cost was reasonably incurred to earn the income. Personal use always has to be carved out.
Gig and platform work
Rideshare, delivery, freelance marketplaces, content platforms, tutoring, reselling, short-term rentals — it is all business income on a T2125, whether or not anyone issued you a slip. Platforms report to the CRA under the digital platform reporting rules, so the gap between what you declared and what they were told is easy for the CRA to see.
The upside is that expenses come off first, and gig work is expense-heavy: mileage, phone, delivery bags, platform fees, a share of your internet. People who report gross platform earnings without expenses usually overpay considerably.
Rideshare drivers have a wrinkle: HST usually applies from the first dollar of ride income rather than at the $30,000 threshold, because of how the rules treat taxi and ride-hailing services. Check before you assume you're a small supplier.
Should you incorporate?
You consistently earn more than you need to live on, so profit can stay in the company taxed at the small business rate and be drawn out in leaner years. Also when you need limited liability, when clients require it, or when you're building something you may sell — the lifetime capital gains exemption only applies to shares.
You draw out everything you earn each year — then you've added a corporate return, bookkeeping and filing obligations without deferring any tax. Also be careful if you have essentially one client: the personal services business rules can strip the small business rate away entirely.
Employee or contractor?
It isn't a matter of what the contract calls you. The CRA weighs control over how the work is done, who owns the tools, your chance of profit and risk of loss, whether you can subcontract, and how integrated you are into the payer's business.
If a contractor is reclassified as an employee, the payer generally becomes liable for the CPP and EI that was never remitted, plus penalties and interest — and the worker loses the business expense deductions they claimed. Either side can ask the CRA for a ruling on the status before it becomes a problem.
One conversation at the start — HST, what to track, how much to hold back, whether to incorporate — saves considerably more than it costs.