Taxes for freelancers and the self-employed in Canada in 2025

This guide explains what you need to know about taxes for self-employed workers and freelancers in Canada. It covers key topics such as tax rates, registration requirements, allowable deductions, and compliance rules.

You’ll also learn how understanding tax allowances and deductions can support your business success – plus how Wise Business can help you manage international payments and tax transfers more easily.

Wise Business for international freelancers

Managing finances across borders as a freelancer? Wise simplifies international payments and currency management for self-employed professionals. With mid-market exchange rates, multi-currency accounts, and transparent fees, you can receive payments from global clients without hidden costs. Plus, detailed transaction histories make tax reporting easier across multiple jurisdictions.

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The tax system for freelancers and self-employed workers in Canada

If you work as a freelancer or are self-employed in Canada, you must report your worldwide income, and pay income tax to the Canada Revenue Authority (CRA). You’re responsible for reporting your income using the relevant options from the following documents:

• Tax Return Lines 13499 to 14300 – Self employment income
• Tax Return Line 26000 – Taxable income final calculation
• Form T2125 – Statement of Business or Professional Activities
• T2SCH125 Income Statement Information – Required for incorporated businesses

If you’re not a resident of Canada the rules may be different. Canada Revenue Agency (CRA) non-resident income tax rules depend on the types of income earned and whether or not any tax has already been withheld at source. Generally you will have to submit a tax return if you earn income from employment or business activities in Canada. The CRA will issue you a notice of assessment to tell you if you owe them money – or if any withheld tax will be returned to you.

In addition to federal taxes, you may have to pay provincial or territory income taxes on your self-employed income, depending on where you live and work.

The amount of tax you owe depends on factors such as your total earnings, location, residency status, and the legal structure of your business. Because Canadian tax rules can be complex – especially for international freelancers who may have to file taxes in more than one country – it can be helpful to seek professional tax advice.

What taxes do freelancers have to pay in Canada?

If you’re self-employed or freelancing in Canada, you’re generally responsible for paying the following taxes:

• Income tax: You must pay federal income tax on business profits at progressive rates, depending on your income level. Provinces and territories may also charge their own income tax.
• Canada Pension Plan (CPP) contributions – Variable contribution rates apply depending on your overall income.
• Goods and services tax / harmonized sales tax (GST/HST) (if applicable):This applies to the sale of goods and services. The tax is collected from customers and then sent to the tax authority.

You’ll generally pay taxes as a self-employed individual if you’re working under one of the following entity types:

• sole proprietorships
• partnerships
• self-employed individuals
• gig workers

For these types of work, business income is treated as personal income. If you’re in a partnership, each partner reports their share of the profits on their own tax return. The tax on corporations works differently.

Income tax for freelancers in Canada

If you’re self-employed in Canada, you must file a CRA tax return and pay income tax on your worldwide income. Non-residents only pay Canadian tax on income earned within Canada.

When you file your federal tax return, you’ll include your self-employment income along with any other personal income (such as wages, interest, or dividends). The 2025 rates for individuals are:

On top of this you’ll pay provincial and territorial tax. Provincial and territorial tax rates vary across Canada, and can be found on the CRA website

If you’re not a resident of Canada you’re taxed differently. CRA non-resident tax depends on the type of income and may include Part XIII tax or Part I tax. The payer usually deducts Part I tax from employment income – you’ll still need to report this income but you’ll then be informed if there is any additional tax due or if a rebate may be warranted.

How to register as freelancer for taxes in Canada

You don’t have to register separately as a freelancer in Canada. Instead, you report your freelance earnings annually to the Canada Revenue Agency (CRA) on Form T2125, Statement of Business or Professional Activities.

If you’re earning or expect to be earning more than 30,000 CAD a year you also need to register for a Business Number (BN) and a GST/HST account.

If you’re an international freelancer working with clients in more than one country, you may have to report income to multiple tax authorities. In these cases, you might need to provide proof of foreign income. 

Wise Business account statements can serve as clear documentation of international business transactions and can be accessed digitally within minutes. You can receive international payments from clients in 20+ currencies. Payments are made using the mid-market rate with no hidden costs, meaning more income in your account. 

Tax deductions and credits for freelancers in Canada

You can lower your freelance tax bill in Canada by claiming allowable business expenses which reduce your taxable income (the amount of income you pay tax on).

Here is an overview of how they work. You can also check the CRA website for further information.

Deductions: expenses and allowances

You can usually deduct ordinary and necessary expenses related to running your business. Example include:

• Advertising
• Business start-up costs
• Business tax, fees, licenses and dues
• Business-use-of-home expenses
• Insurance
• Interest and bank charges
• Legal, accounting and other professional fees
• Maintenance and repairs
• Management and administration fees
• Office expenses
• Other business expenses
• Supplies
• Telephone and utilities
• Travel

Examples of expenses you cannot deduct are:

• Personal or non-business expenses
• Capital property costs
• Commuting costs (travel to and from a regular workplace)
• Entertainment costs

When running your own business, record keeping is essential. You won’t need to submit records when you file your taxes but should keep receipts and records of all business expenses for at least six years, in case the CRA asks for verification.

How to file self-employed tax returns in Canada

Canada’s tax year runs from January 1 to December 31. Most individual tax returns are due by June 15th of the following year for self-employed people – but any tax payments owed are usually required earlier, before the end of April.

You must enter your self-employment income on lines 13499 to 14300 of your normal CRA tax return. You’ll then also need to detail it on line 26000 – taxable income, and you may need to complete the following:

• Form T2125 – Statement of Business or Professional Activities
• T2SCH125 Income Statement Information – Required for incorporated businesses

If you have any questions about how to complete your tax return in Canada you will need to get professional tax advice or seek guidance from the CRA – getting it wrong can mean paying penalties and fines.

Tax payments

You can pay the CRA in the following ways:

• Direct withdrawal from your Canadian bank account
• Debit card
• Credit card
• Cheque
• Money transfer platform (PayPal, Interac e-Transfer)
• Wire transfer
• Cash at a bank or credit union in Canada, or at a post office

If you’re an international freelancer earning income from clients outside Canada, you must still report that income on your Canadian tax return. You can use Wise Business account statements as documentation of international income and transactions.

These electronic statements can be submitted as supporting records if requested by the CRA. You can also use Wise Business to make your final CRA tax payments using a transfer or wire.

GST/HST tax obligations for self-employed workers

GST and HST are the main forms of consumption tax in Canada, similar to VAT in many countries. It’s set and collected by the CRA. Customers pay sales tax at the point of sale, but businesses are responsible for collecting, reporting, and sending (remitting) the taxes to the authorities.

If you earn more than 30,000 CAD in a calendar quarter by supplying taxable goods or services, you have to register for GST/HST with the Canada Revenue Agency. You can also register before you earn this much which can sometimes prove beneficial from a tax perspective – get advice if you’re thinking of this.

Canada pension contributions (CPP) for self-employed workers

CPP contributions aim to increase retirement income for working Canadians and their families. As a self employed person you may need to pay various different levels of CPP based on your taxable annual income. Contributions include a CPP enhancement and then second additional CPP contributions (CPP2) for higher earners. The thresholds for the different levels of contribution are assessed annually and therefore you’ll need to check the rules which apply to you in the tax year you’re contributing.

Corporate tax considerations

If you set your business up as a corporation, you may have to pay corporate income tax using a corporation income tax return (T2 return).

A corporation is a separate legal entity, meaning it pays its own taxes on business profits. Individuals who work for the corporation are taxed as employees, not as self-employed workers.

Corporation tax rates in Canada are 38% of your taxable income, or 28% after the federal tax abatement. In addition to these federal rates, there are provincial or territorial rates which vary depending on where your business is located.

Tax penalties and compliance in Canada

You may face a fine or penalty if you don’t:

• File your tax return on time
• Pay your tax bill by the deadline
• Provide accurate and complete information on your return

Federal corporate income tax penalties vary depending on the situation. If you file as an individual, late-filing penalty is 5% of balance owing, plus an additional 1% for each full month that you file after the due date, to a maximum of 12 months. You may also pay interest on the owed tax.

Penalties for late filing or payment of provincial and local taxes vary. Check with the relevant provincial or local tax authority for specific rules and rates.

Repeated failure to comply with Canadian tax laws can result in tax fraud charges, with penalties including large fines or imprisonment for serious Canadian cases. You can consult a Canadian tax professional if you are unsure about how to file your returns correctly or feel that you need guidance. If you have difficulty making tax payments on time, contact the CRA or your provincial tax authority as soon as possible.

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Finding professional help in Canada

If you’re unsure about anything related to freelance or self-employed taxes in Canada, it can be helpful to get advice from a qualified tax professional. This might be useful when filing your tax return, choosing a business structure, or simply making sure you’re meeting all your tax obligations.

You can get help in several ways, including tax preparation, tax advice, and accounting services. The CRA also provides free assistance tools, including a fast chat service to get answers to your questions.

If you prefer to work with a professional, you can get help from CRA tax clinics or search certified tax experts through the Association of Tax and Accounting Professionals.

Keep in mind that registered professionals usually charge a fee for their services. It’s worth comparing prices and checking that your chosen preparer has experience with freelance or self-employed taxes before hiring them.

International considerations for expat freelancers

If you’re an expat working as a freelancer or self-employed professional in Canada, you may have tax obligations both in Canada and your home country. The exact rules depend on where you live, your citizenship, your home country’s tax laws, and how much you earn.

Many expats must report income to more than one tax authority. To avoid paying tax twice on the same income, check whether your home country has a tax treaty or agreement with Canada. These agreements often help prevent double taxation. If your country doesn’t have one, you may still qualify for foreign tax credits or exclusions to reduce your Canadian tax bill.

Because international tax rules can be complex, it’s often a good idea to seek advice from a qualified tax professional who specializes in expat taxation.

You can open up a Wise Business account to help you manage your international tax affairs. Register an account for free and access all available services for a one-time fee. You can then send, receive, and hold funds in a range of currencies. International transfers use the mid-market exchange rate, with no hidden fees.

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Conclusion

Working as a freelancer or self-employed person in Canada means you’re responsible for managing your own taxes. This includes filing annual tax returns and making regular payments for federal income tax, self-employment tax, and any provincial or local taxes that apply.

If you’re an expat, you may also need to stay up to date with tax obligations in your home country, especially if you must report income there as well.

While taxes can be complicated, this guide should help make things clearer. You can always find more information on the CRA website or get advice from a qualified tax professional.

If you work with clients and receive payments internationally, tools like a Wise Business account can make managing your finances easier. You can open an account for free, pay a small one-time setup fee to access all services, and hold, send, and receive money in multiple currencies. International transfers use the mid-market exchange rate with low, transparent fees.

FAQs

Do freelancers pay tax in Canada?

Yes, freelancers considered to be tax resident in Canada must pay tax on worldwide income.

What is a freelance tax code in Canada?

Resident freelancers in Canada file and pay taxes using their Social Insurance Number (SIN). Non-resident freelancers need to apply for an Individual Taxpayer Identification Number (ITIN).

Do I need to register as a freelancer in Canada?

No, you don’t need to register as a freelancer. The CRA will automatically consider you a sole proprietor if you report self-employment income on your tax return.

Can I be self-employed and employed in Canada?

Yes, you can be self-employed in Canada as well as working as an employee. However, you will need to report income from all sources on your annual tax return to make sure that you pay the correct taxes.

Can I freelance in Canada with a student visa?

This depends on the visa you hold, the number of hours, and where your clients are based. As it is important to comply with the rules of your visa, you will need to get individual advice before you take on any local or international freelance work from Canada.

Useful resources

(Information last checked on 20th November 2025)

• Canada Revenue Agency (CRA) – gig economy and freelance taxes
• Canada Revenue Agency (CRA) – allowable business expenses
• Canada Revenue Agency (CRA) – GST and HST registration rules
• Canada Revenue Agency (CRA) – non-resident income tax
• Canada Revenue Agency (CRA) – self employed tax tips
• Canada Revenue Agency (CRA) – Canada Pension Plan contributions
• Canada Revenue Agency (CRA) – tax rates on income for individuals, with link to provincial tax information