What counts
Freelancing, gig apps, delivery and ride-sharing, selling things you make, reselling for profit, tutoring and paid side projects all count as business income, whether you’re paid by card, e-Transfer, cash or tips. Selling your own used things for less than you paid isn’t taxable.
Renting out a room or your home short-term is reported too, as rental or business income depending on the services you provide.
How it’s taxed
Your profit, what you earn minus your business expenses, is added to your other income and taxed at your marginal rate. You also pay CPP on your self-employment profit: both the employee and employer shares, because you’re both. In 2026 that’s 11.9% on earnings between $3,500 and $74,600, counting your job and your side income together, and 8% (CPP2) from there up to $85,000. Part of it is deducted from your income, and part earns a tax credit. If your job already takes the maximum CPP, you pay little or none on the side.
| Part | Amount |
|---|---|
| CPP (both halves) | $1,190.00 |
| Federal and provincial income tax | $2,664.63 |
| You keep | $6,145.37 |
| Your side profit | $10,000.00 |
Your job already used the first $3,500 of earnings, which have no CPP, so you pay both halves (11.9%) on the side profit. Part of that CPP is deducted from your income, which lowers the income tax a little. Here you’d set aside about 39%.
You don’t pay EI on self-employment income, and you can’t get regular EI benefits from it. You can opt in to pay EI for special benefits such as maternity, parental and sickness benefits. Work out your own numbers with the self-employed tax calculator.
GST/HST
You’re a small supplier until your taxable sales pass $30,000 in any 4 calendar quarters in a row, or in a single quarter. Then you must register, charge GST/HST and file returns. Ride-sharing and taxi drivers must register from their first dollar. Below the threshold you can register voluntarily, which lets you claim back the GST/HST you pay on business costs.
Platforms report your income
Digital platforms, such as online marketplaces, short-term rental sites and gig apps, report what their sellers earn to the CRA each year by January 31. The CRA can match it to your return, so report everything, even if you didn’t get a slip.
Expenses you can deduct
Costs you need for the work, such as supplies, software, fees charged by the platform, part of your phone and internet bills, and the business share of your car or home. Keep a log of business driving, and keep receipts and records for 6 years. Personal costs, and the part of a cost you’d have paid anyway, aren’t deductible.
Paying the tax
No tax is taken off side income, so set some aside from every payment. Many people put 25% to 35% of their profit into a separate savings account; with a job that already puts you in a higher bracket, it can be more, as in the example above.
- Filing: you have until June 15 to file, but any balance is still due April 30.
- Instalments: if you owe more than $3,000 ($1,800 in Quebec) this year and in either of the 2 years before, the CRA asks you to pay instalments during the year, due March 15, June 15, September 15 and December 15.
- Lower the bill: an RRSP or FHSA contribution reduces the income your tax is worked out on.
The tax refund calculator shows how side income changes what you owe on your return.