The CRA considers you self-employed if you work for yourself and earn income from a business or professional practice, rather than working as an employee for a wage or salary. You don't need to be incorporated, have business registration, or work full-time to be self-employed in the CRA's eyes. The key factor is that you have the right to control how, when, and where you work, and you receive payment for goods or services you provide. Self-employment status matters because it affects how you report income, what deductions you can claim, and whether you owe CPP contributions. The CRA uses several tests to determine if you're self-employed. Unlike an employee who receives a T4 slip, a self-employed person typically receives T4A slips, invoices themselves, or reports business income directly. You're usually self-employed if you: - Provide your own tools or equipment - Work for multiple clients or customers - Can hire others to do the work - Bear the financial risk if work isn't completed - Set your own hours and work schedule - Cover your own business expenses The CRA looks at the total picture of your working relationship, not just one factor.
No, you don't need formal registration to be self-employed. However, if you operate a sole proprietorship or partnership, you may want to register for a business number (BN) to open a business bank account and track expenses separately. If you're incorporated, registration is required.
Yes, absolutely. Many people work as employees with a T4 and also run a side business. You report both on the same tax return, with employment income on one section and self-employment income on another. You'll pay CPP contributions on both types of income.
The CRA may reassess your status if they believe you should be classified differently. If you're unsure, you can request an employment status ruling from the CRA before filing. This provides clarity about whether work is considered employment or self-employment for your situation.
All self-employment income is taxable after you deduct eligible business expenses. There's no minimum threshold. Even small amounts of self-employment income must be reported on your tax return. Net income (revenue minus expenses) is what gets added to your total taxable income.
You must file if your total income from all sources exceeds the basic personal amount for the year. However, filing is still recommended even if you owe no tax, because you may be eligible for refundable credits like the Canada Child Benefit.