Self-employed tax returns
A self-employed return is a personal return with a business inside it. The business half is where the deductions, the CPP and almost all of the risk live.
Quick answer: A self-employed return reports business income on form T2125 inside your T1. The filing deadline is 15 June rather than 30 April, but any balance owing is still due 30 April — so the later deadline is for paperwork, not for payment. Both self-employment CPP contributions are yours to pay.
What is included
- The T1 return and the T2125 business statement, e-filed together.
- Deductions reviewed properly — home office, vehicle, supplies, and the ones commonly claimed wrongly.
- Capital cost allowance where equipment or a vehicle is owned rather than expensed.
- Instalment calculations, so next year does not arrive as one bill.
- GST/HST cross-checked against the business income reported.
- A view on incorporating, where the numbers are starting to suggest it.
The two deadlines that are not the same
A self-employed person files by 15 June. Any tax owing is due 30 April. Owing money on 1 May while holding a filing deadline six weeks away is the single most common source of avoidable interest on a self-employed return.
The other is CPP. An employee pays half and the employer pays half; a self-employed person pays both halves on their net business income. It is not optional, and it is usually the largest single line in the amount owing.
When it is worth incorporating
Incorporating is rarely wrong in principle and often wrong in timing. The triggers are usually profit consistently above what the household needs, a contract or a hire that changes the risk, or an asset purchase ahead. Sole proprietor to incorporation works through when, and the calculator puts numbers on it.
Who this is for, and who it is not
A good fit: a sole proprietor, contractor or freelancer with business income to report, including someone running a side business alongside employment.
Not a fit: an owner whose profit has been consistently above what the household draws for a couple of years — that is usually a signal to look at incorporating first. In either case we say so on the first call rather than quoting for work you do not need.
Where a second person is involved from the start, the choice is not just whether to incorporate but going into business with someone else.
Common questions about self-employed returns
Can I claim my home office?+
What about the vehicle?+
Do I need to register for GST/HST?+
I have both a job and a side business. Does that change it?+
Talk to a CPA about this
One Chartered Professional Accountant, start to finish. Fixed fees, quoted in writing before any work begins, and no obligation from a first conversation.
“Sunny and his team have been completing my bookkeeping, taxes and financials for the last 2 years and they have been amazing. Thank you!”