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If you recently started a side hustle or became a freelancer, you likely have questions about taxes, business expenses and other financial matters.
Over the past few years, many Canadians have discovered their inner entrepreneur, resulting in thousands of new side hustles and small businesses. One in four side hustles and small businesses were started during the pandemic, according to a survey done in mid-2022 by Angus Reid for Intuit Quickbooks. And, at the end of 2022, two in five Canadians planned to take on a side hustle or increase their work hours, found a survey conducted by Accenture.
If you want to earn extra income, check out the MoneySense articles below for practical tips, tax info and inspiration for launching your own side hustle or small business.
For ideas on how to earn extra income, read How to make more money in Canada: 6 side hustle ideas.
The deadline to file your income tax return if you’re self-employed, or your spouse or common-law partner is self-employed, is June 15, 2023. Note, however, that if you owe taxes, the deadline to pay was May 1, 2023. (Usually it is April 30, but this year it fell on a weekend.) The CRA charges a late-filing penalty, so try to catch up ASAP.
You must report any business income on your tax return. The Canada Revenue Agency (CRA) says that business income “includes money you earn from a profession, trade, manufacture or undertaking of any kind, an adventure or concern in the nature of trade, or any other activity you carry on for profit and there is evidence to support that intention.” Business income doesn’t include employment income (wages and salaries from employers).
If you repeatedly fail to report all your sources of income, you may have to pay a penalty (federal and provincial/territorial). Learn more about false reporting and failure to report income. If you want to fix an omission from previous years, you can apply to the CRA’s Voluntary Disclosure Program—it’s better to be pro-active than to wait for the tax people to come calling. The same is true if you haven’t filed a tax return. Catch up soon to minimize penalties and interest charges.
If your side hustle generates sales of $30,000 or more (before expenses) within a calendar quarter or over four consecutive quarters (not necessarily a calendar year), you will have to register for a GST/HST number. Read more about charging sales tax.
Self-employed individuals can deduct a wide range of business expenses, such as business startup costs, business-use-of-home expenses, insurance, legal fees, interest and bank charges, office supplies, telephone and utilities, property tax, advertising costs and more. See the CRA’s list of eligible operating expenses.
Maybe, in the case of uniforms and protective clothing and shoes, but not everyday apparel. Talk to a tax preparer or an accountant about your situation.
When you complete your tax return, report your gross and net self-employment income (or loss) on lines 13499 to 14300. (If you have a loss, put parentheses around the dollar amount.)
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