Canada Self-Employed Tax Guide: T2125, Expenses & CPP
Canadian sole proprietors and many independent contractors report business or professional income on a personal T1 return. Organized bookkeeping helps support net income, eligible expenses, instalments and GST/HST obligations. Province, business structure and tax year can alter what applies.
Report business income and expenses
Form T2125 is generally used to report business or professional income and expenses with a T1 return. Record gross receipts, fees, refunds and platform payments. Claim only expenses incurred to earn business income, keep supporting records and allocate mixed personal/business use. Inventory, capital property, vehicles and home-office costs have specific rules; a cash outflow is not automatically a current deduction.
CPP, GST/HST and filing dates
Net self-employment earnings can require Canada Pension Plan contributions, generally including both portions on pensionable earnings within annual limits. GST/HST registration is separate from income tax; a small-supplier threshold generally measures $30,000 of taxable supplies over a calendar quarter or four consecutive quarters, with detailed exceptions and timing rules. Self-employed individuals generally have a later filing deadline but a balance owing is generally due April 30. Verify CRA dates for each year.
| Item | What to track |
|---|---|
| Business income | Invoices, platform receipts and refunds |
| Expenses | Receipts, purpose and private-use allocation |
| CPP | Pensionable net earnings and contributions |
| GST/HST | Taxable sales, threshold and registration date |
Practical checklist
- Reconcile invoices, platforms and deposits to gross business income.
- Keep receipts and note how each cost helped earn income.
- Allocate personal use for vehicles, phone, internet and workspace.
- Review capital purchases and inventory separately from recurring costs.
- Monitor GST/HST threshold, CPP and the return/payment due dates.
General information only, not personal tax advice. Check current official guidance for the relevant tax year or consult a qualified professional.