Self-employment in Canada comes with significant tax complexity — and significant opportunity. The HST registration requirement, doubled CPP contributions, and the ability to deduct business expenses all require understanding to navigate correctly.
HST/GST registration: when it's mandatory
Once your business revenues exceed $30,000 in any rolling 12-month period, you must register for HST/GST. Once registered, you collect HST on your sales and can claim Input Tax Credits (ITCs) to recover HST paid on business purchases — potentially recovering significant tax on equipment, software, and business costs.
The self-employed CPP dilemma
Self-employed Canadians pay both the employer and employee portions of CPP — effectively 11.9% of net self-employment income (vs 5.95% for employees). On $80,000 net income, this is $7,734 — compared to $3,867 for an employee. This is a significant expense, but it also builds a larger CPP entitlement at retirement.
Allowable business expenses for the self-employed
- Home office: the percentage of home used exclusively for business (square footage method)
- Vehicle: business-use portion only (keep a mileage log)
- Professional fees: accountant, legal, insurance
- Equipment: computers, cameras, tools — Capital Cost Allowance (depreciation)
- Marketing: website, ads, design
- Professional development: directly related courses and conferences
- Office supplies, postage, phone/internet (business portion)
- Meals and entertainment: 50% deductible for legitimate business purposes
RRSP: the self-employed tax shelter
Self-employed Canadians have no employer pension — but can contribute 18% of the previous year's earned income to their RRSP (max $31,560). In a high-income year, maximising RRSP contributions can defer tens of thousands in taxes. The refund can then be invested in the TFSA for tax-free growth.
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About the author
Enrique 'Kike' Faúndez is an Information Systems and Management Control Engineer from Universidad de Chile, with master’s degrees in Finance from Universidad de Chile and Industrial Engineering from Pontificia Universidad Católica de Chile. He has 15+ years of experience in regulated financial services across finance, operations, and digital product development. He founded CashControlly in Santiago, Chile, with the conviction that personal financial control should not be a privilege, but an accessible and well-designed tool.
- Master's in Finance, Universidad de Chile
- Master's in Industrial Engineering, Pontificia Universidad Católica de Chile
- Information Systems and Management Control Engineer, Universidad de Chile
- AI and ITIL certifications
- 15+ years in regulated financial services
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