Taxes for hairstylists and chair renters in Ontario

Employee or chair renter: how the CRA decides

The CRA does not accept a label on its own. For barbers and hairdressers it publishes two lists of indicators, and it says you have to weigh all the facts of the working relationship, because no single item decides the question. Signs of an employee include the payer setting pay and hours, deciding which stylist sees which client, owning the walk-in clients, supplying the tools and equipment, and keeping the revenue the stylist generates.

Signs of self-employment include renting or leasing a space or a chair, setting your own schedule and your own prices, accepting or refusing clients, keeping an exclusive client list, collecting and keeping all the revenue from your services, selling products to your clients and keeping the proceeds, being able to hire a replacement, and advertising your own services. A stylist who pays a fixed monthly amount, brings their own tools and products, and books their own appointments is the CRA’s own example of a chair renter.

What changes when you are self-employed

If you are an employee, your employer deducts CPP, EI and income tax from your pay and gives you a T4. If you are a chair renter, nobody withholds income tax from your earnings. You collect the revenue yourself, pay your own rent and costs, and report the net result on your personal return.

That also means you carry the cash-flow risk. The tax on your profit does not arrive in your bank account as a deduction, so it is easy to spend money that belongs to the CRA. Our article on how much tax to set aside when you are self-employed shows how to build a rate from your own numbers. If you are unsure which side of the line you are on, the CRA’s employee or contractor guidance is a reasonable first read, and our employee or contractor tool can help you organize the facts.

CPP and EI for chair renters

CPP and EI work differently from most self-employment. The CRA says a self-employed barber or hairdresser is responsible for paying their own CPP contributions when they file their return, in the same way as other self-employed people. Our article on CPP on self-employment income explains the 2026 rate and how the amount is claimed.

EI is the unusual part. Under special regulations, the owner or operator of a barbering or hairdressing establishment is treated as the employer of a chair renter for EI purposes when three conditions are met: the worker is a barber or hairdresser, provides services normally provided in such an establishment, and does not own or operate it. The rule is limited to barbers and hairdressers; the CRA says manicurists, beauticians and massage therapists working in a salon are not treated this way. In that case the salon owner pays both the employee and employer shares of the EI premiums, calculated on the chair renter’s insurable earnings. The CRA describes this treatment as applying even to a worker who is self-employed. Owners generally report these amounts on a T4 slip, not a T4A. If you are a chair renter, ask the owner how they are handling this and keep a copy of any slip.

What you report and where

Self-employed income is reported on Form T2125, Statement of Business or Professional Activities. Gross fees include everything you earned from services and product sales, whether you were paid in cash, by card or through an appointment app. The CRA also says bartering counts, so a haircut traded for a service has a value that belongs in income. Tips you receive in the course of the business are generally part of that income too, so keep a record of them as well as your card sales.

Your net income from the form flows to your personal return. The 2026 return is filed in 2027. Our 2026 tax guide shows the filing and payment dates that apply. Note that the balance owing for a self-employed person is generally due earlier than the filing deadline, so check both dates.

Expenses chair renters commonly claim

The general test from the CRA is that you can deduct reasonable current expenses you incur to earn business income, and you can deduct only the business part of any expense. Rent is a named expense line, so the chair or booth rent you pay the salon owner is generally deductible. Supplies such as colour, products, disposable items and towels, advertising, business insurance, licence fees and dues, professional fees and software for bookings or card processing are typical items to look at.

Larger purchases are different. The CRA says you cannot deduct the cost of buying capital property as a current expense. A professional chair, dryer or set of tools may instead be written off over time through capital cost allowance, which depends on the class and the rules for the year of purchase. Ask which class applies before you decide how to treat each item. Our guides on common business expenses and how to categorize them go through the usual lines.

If you use a vehicle for mobile appointments or supply runs, keep a logbook and read our article on vehicle expenses. Which trips count as business driving depends on the facts.

GST/HST: when a chair renter registers

The CRA lists barber and hairstylist services among taxable supplies, which means they are generally subject to GST/HST in Ontario. The question for a chair renter is whether you must register. A small supplier does not have to register until revenue from taxable supplies exceeds $30,000 over four consecutive calendar quarters, or in a single calendar quarter, with associated persons counted together. Once you pass it you must register, and the date you start charging depends on how you crossed: on the supply that crosses the line if it happens within a single quarter, or from your effective date of registration if it builds up over four quarters.

Registering voluntarily is allowed and can help you claim input tax credits on your costs, but it means collecting and filing from day one. Our GST/HST registration checker and the article on voluntary registration go through the trade-off. Track revenue by calendar quarter early, since it is easier than reconstructing the history after the threshold has been passed.

If you hire help or rent to others

A chair renter who hires an assistant or a receptionist may become an employer, with payroll deductions and a payroll account of their own. The CRA’s indicators of self-employment also include being able to hire workers and being responsible for paying them, so this is consistent with running your own business, but the obligations are real. See the first payroll checklist before the first payday.

If you are the owner renting chairs to others, the same indicators decide whether your renters are self-employed, and the EI deemed-employer rule above applies to you. Either party can ask the CRA for a CPP/EI ruling on a specific arrangement, and one written agreement does not settle it by itself.

What to bring to your accountant

Bring your rental agreement with the salon, a month-by-month record of income including tips and product sales, receipts for supplies and equipment, insurance and licence statements, any EI or T4 slips the owner issued, and your last notice of assessment. If you moved between employee and chair-renter status during the year, say so, because the two periods are reported differently.

Ask three questions: whether your arrangement looks like self-employment on the CRA’s indicators, whether you need instalments for 2027 based on your current income, and whether your revenue is approaching the GST/HST threshold. These are decisions that depend on your own facts.