Self-employment tax in Canada for 2026: registration, double CPP contributions, expenses and quarterly instalments

A self-employed person in Canada pays both halves of the Canada Pension Plan contribution, the employee's share and the employer's: 11.90% in 2026 on net self-employment earnings between $3,500 and $74,600, up to a maximum of $8,460.90. On top of that comes a second contribution of 8% on earnings between $74,600 and $85,000, up to a maximum of $832. Nobody withholds anything from you during the year, so you pay the tax and the contributions together when you file your return, or in quarterly instalments if the balance you owe is over $3,000.

This guide is general information from official sources, not tax advice for your situation.

Do you need to register your business before you start?

The simplest form of self-employment is a sole proprietorship, and you don't need a company or a special number to start. You report your income and losses on your personal T1 return using Form T2125.

As an unincorporated sole proprietor, you only need a Business Number (BN) from the CRA in two cases: when you register for GST/HST, or when you open a payroll account to hire someone. Registering a business name with your province is a separate matter: in some cases you don't need to register if you work under your own name, and in Quebec you must register if you operate under a name that doesn't include your first and last name.

Double CPP contributions: how much do you pay in 2026?

An employee pays 5.95% and the employer pays the same. You pay both shares, which is why your maximum is double an employee's.

A rough example: if your net profit is $40,000, your first contribution is about 11.90% of $36,500, or roughly $4,344, on top of your income tax. You calculate the contribution on Schedule 8, and part of it is deducted from your income on line 22200.

In Quebec: you don't contribute to the CPP but to the Quebec Pension Plan (QPP), which is run by Quebec. Its rates differ from the table above, and you use the Quebec version of Schedule 8. Check the figures with Retraite Québec before you calculate.

To compare your net self-employment income with the take-home pay from a job at the same amount, try our take-home pay calculator, and read about the difference between gross and net salary.

The expenses you can deduct from your income

The CRA's general rule: a deductible expense is one you incur for the sole purpose of earning business income, as long as it's reasonable and you keep the invoice or receipt. Long-term assets such as a computer or a car aren't deducted all at once; they're written off over several years through the capital cost allowance (CCA).

• Goods and cost of sales: if you sell products, the cost of what you sold is deducted from your income.
• Meals and entertainment with clients: the maximum you can claim is 50% of the amount, with limited exceptions.
• Wages paid to your spouse or children: deductible if you actually paid them, the work was necessary for the business, and the pay was reasonable.
• Fines and penalties: most aren't deductible.

A home office

You can deduct part of your home costs if you meet one of two conditions: the space is your principal place of business, or you use it only for the business and regularly meet clients there. The calculation can include part of your heating, electricity, home insurance and cleaning supplies, as well as property tax and mortgage interest.

Work out the percentage in a reasonable way, for example by dividing the office area by the total area of the home. This deduction has a limit: it can't create or increase a loss, and any amount above your profit carries forward to the next year. Be aware, too, that claiming CCA on part of the home itself may have tax consequences when you sell it later, so ask an accountant before you claim it.

Your car

If you use your car for both business and personal driving, you can only deduct the business portion. Prove it with a logbook that records, for each business trip, the date, destination, purpose and number of kilometres, along with the odometer reading at the start and end of the fiscal year.

Once you've kept a full year's logbook, it counts as a "base year". In later years, you can keep a sample logbook for three months instead, as long as the business-use percentage in it is within 10% of the base year's.

Quarterly instalments: when will you be asked to pay them?

The CRA will ask you to pay tax in instalments if your net tax owing is more than $3,000 in 2026 and in either 2025 or 2024. In Quebec, the threshold is lower: $1,800.

The most expensive mistake self-employed people make is thinking the 15 June deadline covers payment too. It's the filing deadline only, and interest is charged on any balance not paid by 30 April. Set aside a percentage of every payment you receive in a separate account; you can start with our guide to opening a bank account.

Uber and delivery app drivers: two different rules

This is where many newcomers go wrong, because the rule depends on what you're carrying:

In every case, you report all your income, including tips. Once you're registered for GST/HST, you must charge the tax and file GST/HST returns, and in return you can claim back the tax you paid on business expenses. In Quebec, Revenu Québec administers the GST/HST for businesses located there, so you deal with it rather than the federal agency.

Before you start carrying passengers in your own car, check with your insurer: our car insurance guide explains why coverage depends on how the car is used.

Records: at least six years

Keep your records and supporting documents for six years from the end of the last tax year they relate to, at your home or place of business in Canada. Destroying them sooner requires written permission from the CRA using Form T137, and destroying them without permission can lead to prosecution. A complete base-year logbook for your car must be kept for six years from the end of the last year you relied on it.

You're responsible for your records even if an accountant keeps them. If you want someone to handle your bookkeeping, search our accountants directory.

What this guide doesn't do

It doesn't calculate your actual tax, which depends on your province, your credits and your other deductions. Nor does it settle whether you're "self-employed" or an "employee" in the eyes of the law: the CRA decides that classification based on the actual working relationship, not only on what the contract says. If this is your first year in Canada, start with our guide to your first tax return, and don't forget that low-income workers may be entitled to the Canada Workers Benefit.

Frequently asked questions

Do I pay CPP contributions if my profit is small?

You don't contribute on the first $3,500 of your net self-employment earnings, which is the basic exemption. On anything above that, a self-employed person pays 11.90% in 2026.

Are electronic receipts enough?

The CRA requires every expense to be supported by a document such as an invoice, a receipt or a purchase agreement, and records must be kept for six years. Keep electronic copies organized, readable and retrievable for that entire period.

I have a job and a self-employed side business. Do the same rules apply to me?

Yes, on the self-employment income: you report it on Form T2125 and pay both CPP shares on it. Schedule 8 combines what was deducted from your pay with what you owe on your self-employment income, so go through it carefully or get help from an accountant.

When does the CRA send instalment reminders?

If you're required to pay by instalments, the CRA sends a reminder in February covering the March and June payments, and another in August covering the September and December payments.

I deliver food and earn under $30,000. Do I have to register for GST/HST?

No, not as long as you're a "small supplier" who doesn't exceed $30,000 over four consecutive quarters, although you can register voluntarily. Carrying passengers, on the other hand, requires registration from the first dollar.

Sources and next step