Taxes for Canadian side hustles
You picked up freelance work. You sell on Etsy. You drive Uber. Here is what you actually owe.
Published April 23, 2025 · 6 min read
Side hustle income is taxable income. The CRA does not care if you call it a side hustle, a hobby with revenue, or a small business. If money is coming in for goods or services, they want to know. Here is the simplified version.
Report everything
All income from your side hustle goes on T2125 with your personal tax return. This is the form for self-employed business income.
Do not assume PayPal, Stripe, or platform 1099-like forms do not get reported to the CRA. They increasingly do.
You can deduct related expenses
Materials, software, advertising, professional fees, home office portion (if applicable), vehicle costs (if applicable), bank fees on the dedicated business account.
The same rules apply as for any business. Document everything. Keep receipts.
When you cross $30K in revenue
You must register for GST/HST. The clock starts on your first $30K in any 4-quarter rolling window.
Once registered, you charge GST/HST on services to Canadian customers. You also claim Input Tax Credits on business expenses.
Many people delay registration. Sometimes that is fine. Sometimes registering early helps you recover GST/HST on expenses.
Setting aside taxes
Rule of thumb: set aside 25-30% of your net side hustle income in a savings account.
Quarterly instalment payments are required if you owe more than $3,000 in income tax in the year (or expect to). Missing instalments triggers interest charges.
Side hustles are a great way to build wealth or test business ideas. They are also a tax responsibility from dollar one. Track income, track expenses, set aside reserves, file properly. Take the Deductly quiz to find programs that apply to your specific side hustle.