Self-employed taxes in Canada, explained calmly

Going self-employed changes one thing about tax that catches almost everyone out: nobody withholds anything for you. As an employee, income tax, CPP, and EI came off every paycheque before you saw the money. Now the full bill arrives at once — and it’s bigger than most people guess, because you also pay a part of CPP your old employer used to cover. The good news: the whole thing is knowable in advance. This guide walks through each piece calmly, with the real 2026 figures, so April feels boring instead of frightening. Where a topic deserves its own deep dive, we link to it — and there’s a free calculator above so you can see your own numbers as you read.

How much tax should you set aside?

The honest answer is not a flat 25–30%. That rule of thumb under-funds higher earners by thousands and over-funds lower earners who barely owe anything after the Basic Personal Amount. Your real set-aside is three things stacked: federal income tax (progressive 2026 brackets from 14%, after the federal Basic Personal Amount of $16,452), provincial income tax (your province’s own brackets on top), and CPP (both halves — see below). On $60,000 of net income in Ontario that’s about $6,193 federal, $2,625 provincial, and $6,724 CPP — roughly $15,541 in all, or $1,295 a month. The safest habit is to move your share into a separate account the moment income lands, so it’s never money you feel like you have.

Deeper: our set-aside guide and the tax set-aside calculator size it by income and province.

CPP: why you pay both halves

Employees split CPP with their employer, each paying half. Self-employed people are both employer and employee, so you pay the whole thing — a combined 11.9% in 2026 on net income between the $3,500 basic exemption and the $74,600 ceiling (a maximum base contribution of $8,460.90). Quebec residents pay QPP at 12.6% instead. There’s also a second tier, CPP2, on income between $74,600 and roughly $85,000. Half of your CPP is deductible on your return, which softens the blow a little. This is the single biggest surprise on most people’s first self-employed return, so build it into your set-aside from day one.

Deeper: CPP for the self-employed explains CPP2 and whether opting into EI is worth it.

GST/HST and the $30,000 line

GST/HST is separate from income tax, and it’s a common source of confusion. You must register once your taxable revenue (sales, not profit) crosses $30,000 — and the test is a rolling four consecutive quarters, not a tidy calendar year, or a single quarter on its own. Once you cross it you have 29 days to register and start charging. The rate follows your client’s province (place of supply): Ontario 13% HST, Nova Scotia 14%, British Columbia 5% GST plus 7% PST — not “12% HST”. Money you collect is held in trust for the CRA, so keep it in its own account, never mixed with your income-tax set-aside.

Deeper: the GST/HST registration checker, rate by province, and when to register.

Do you have to pay quarterly instalments?

Instalments are how the CRA collects tax through the year once your bill gets large enough. You’re asked to pay them when your net tax owing is more than $3,000 ($1,800 in Quebec) in the current year and in one of the two previous years. The dates are March 15, June 15, September 15, and December 15. A CRA instalment reminder in the mail is not a bill — it’s an estimate of what they think you should pay — but the obligation itself is real, and interest applies if you owe and skip them. If your income dropped this year, you can base instalments on your own lower estimate instead of the CRA’s figure.

Deeper: the CRA instalment calculator tells you whether you owe them and estimates each payment.

The deadlines that actually matter

Self-employed people get a later filing deadline — June 15 — but there’s a catch that trips up thousands every spring: any balance you owe is still due April 30. File in June, pay in June, and interest has already been running on your balance since May 1. The simplest way to stay safe is to have the money set aside before April, so paying by April 30 and filing by June 15 are two calm, separate acts. Full deadline breakdown.

What you can write off

You can deduct reasonable expenses incurred to earn business income, all reported on Form T2125: a home-office portion of your rent, utilities, and internet; business-use vehicle costs; supplies and software; professional and bank fees; and half of eligible meals and entertainment. You don’t need a receipt for a guess — you need a receipt for a claim, and the CRA generally expects you to keep records for six years. Legitimate deductions lower both your income tax and, indirectly, your CPP, so tracking them through the year is worth real money. The deductions guide maps each category to the T2125.

Your province changes the number

Provincial brackets and Basic Personal Amounts vary, so the same income owes a different amount depending on where you live. Here’s the 2026 self-employed set-aside on $60,000 of net income, lowest rate first — tap any province for its full brackets:

Deeper: self-employed tax rates by province.

Just went self-employed? Start here

If this is your first year, you don’t have to do everything at once. In plain order: open a separate bank account and start moving your set-aside into it as income arrives; keep every receipt and label it; watch your rolling revenue against the $30,000 GST/HST line; and mark April 30 and June 15 on your calendar. You generally don’t need to incorporate or even get a business number on day one — as a sole proprietor you report business income on Form T2125 attached to your regular T1. The goal for year one isn’t perfection. It’s not being surprised.

Deeper: side-hustle taxes, gig-worker taxes, and if you’ve fallen behind, a calm catch-up guide.

Verified against Canada Revenue Agency source material (canada.ca) as of July 2026. This is general information, not tax advice — confirm your specifics with a qualified Canadian accountant.