Navigating Tax Season in Canada: Tax Tips for Self-Employed Individuals

January 8, 2025

As tax season approaches, self-employed Canadians are gearing up for one of the year’s most important financial tasks—filing their taxes. Navigating self-employed income tax obligations can feel daunting, but with the right preparation and knowledge, you can ensure a smooth and stress-free process. Whether you’re a freelancer, contractor, or small business owner, these tax tips will help you maximize your deductions and stay compliant with CRA regulations.

Get Organized Early
Starting your tax preparation early is essential for a stress-free filing experience. Begin by gathering all necessary documents, such as income statements (e.g., invoices, T4A slips, and T2125 forms), receipts, and expense records. Utilize accounting software or maintain a detailed spreadsheet to track your finances throughout the year. Getting organized early makes filing taxes easier and gives you plenty of time to find deductions and fix any problems.
2025 Tax Deadlines for Self-Employed Individuals
  • Filing Deadline: The tax filing deadline for self-employed Canadians is June 15, 2025, but since it falls on a Sunday, the effective deadline is June 16, 2025.
  • Payment Deadline: Any balance owing must be paid by April 30, 2025, to avoid interest or penalties.

Consult Canada’s Tax Deadline Fact Sheet for more information.

Understand the T4A Form
The T4A, or Statement of Pension, Retirement, Annuity, and Other Income, is issued to individuals who receive payments that aren’t classified as traditional employment income. For self-employed Canadians, this form typically reflects income earned as a contractor, freelancer, or from other non-employment sources, such as pensions, annuities, or commissions. The T4A is issued by clients, organizations, or companies that have paid you for services or other income during the tax year. It’s important to report the income shown on your T4A when filing your tax return, as it’s considered taxable income.
Understand Form T2125
Self-employed individuals must report their business income and expenses using Form T2125: Statement of Business or Professional Activities. This form is crucial for calculating your net business income, which is included on your personal income tax return.
 
Form T2125 allows you to:
  • Report all business income earned during the year.
  • List and deduct eligible business expenses such as office supplies, advertising, and travel costs.
  • Calculate the depreciation of assets like vehicles or equipment under the Capital Cost Allowance (CCA).
Claim Deductible Expenses
Self-employed individuals in British Columbia can take advantage of several deductions to lower their taxable income. Here are some examples:

Consult CRA’s list of types of operating expenses.

Plan for GST/HST and PST Filing Requirements

If your business earns over $30,000 annually, you must register for a GST/HST account and charge 5% GST on taxable goods and services. Many businesses in BC are also required to charge PST on goods and certain services. However, PST is not required in some cases, such as for businesses earning less than $10,000 in sales, certain exempt goods (e.g., groceries, prescription drugs), or sales to non-residents.

Be sure to register, collect, and remit PST if applicable. For more information, visit the BC government’s official page.

Get Professional Help from Cross & Co.’s Tax Experts
Confidently navigate tax season with the support of our expert CPA team. Our skilled accountants and bookkeepers are here to help you uncover overlooked deductions, ensure compliance with CRA regulations, and maximize your return. Contact us today—we look forward to hearing from you!
 
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