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Tax Articles

Self-Employment & Taxes

Self-Employment & Taxes

Being self-employed in Canada comes with a different set of tax responsibilities that carry their own consequences if not properly managed. It’s not all bad news, as there are also advantages to being self-employed when it comes to taxes, as we’ve demonstrated previously in these two great posts.

Coming back to the income portion of self-employment, self-employment income is earned from a business that one operates themselves as a sole proprietorship or with someone else as a partnership. This simply means that any income generated from an activity for profit, or with what the CRA calls “reasonable expectation of a profit”, is considered business income and must be reported as such. These activities that constitute a business are quite vague, as shown below:

  • A Profession
  • A Calling
  • A Trade
  • A Manufacture
  • An Undertaking of any Kind
  • An Adventure of Concern in the Nature of Trade

It is important to note that employment income (that is if one works for a company as an employee), is not classified as business income.


Having trouble navigating self-employment tax issues? Ask the experts and get pointed in the right direction!


When it comes to a sole-proprietorship or a partnership, the business income is reported on personal income tax filings. This means the due dates, financial penalties, and interest charges are the same as anyone else filing taxes.

Is it Rental Income or Business Income?

We get asked this quite regularly, if certain rental property income is classified as ‘rental income’ or as ‘business income’. If income is being earned on a rental property that includes basic services such as heating, hydro, parking, and laundry, this income is usually considered rental income. On the other hand, if additional services such as cleaning, securities, or meals, are provided above basic services, then the income might be classified as business income. Remember, the more services that are provided to a rental property, the more likely that a business operation is taking place. For more information about rental and business income, check out this CRA guide available on their website.

DISCLAIMER:
THIS ARTICLE deals with a number of complex issues in a concise manner; it is recommended that accounting, legal or other
appropriate professional advice should be sought before acting upon any of the information contained therein.
Although every reasonable effort has been made to ensure the accuracy of the information contained in this letter, no individual or
organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of
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