See the sourced 2026 Ontario tax guide: rates, limits and deadlines →
What to take away
- Side income is generally taxable even if it is small and even if no slip arrives, so keep a record from the first dollar.
- No tax is withheld on self-employment income, so plan for the balance, CPP contributions and possibly instalments.
- HST registration has a $30,000 small supplier threshold, but your income tax obligations begin well before that.
Is your side hustle a business or a hobby?
For income tax, the CRA describes a business as an activity carried on with a reasonable expectation of profit, backed by evidence of that intention. Selling products, freelancing, driving, tutoring or consulting for money usually points to a business. A pastime that happens to cover its costs is different. The CRA’s own guidance says employment income is not business income, so a second job with a T4 follows the ordinary employment rules instead.
Evidence matters. Keep pricing, invoices, advertising, a separate account, a plan to grow and a record of the time you spend. These are the facts that show a profit motive if the CRA ever asks. If you are unsure, bring the details to an accountant before you file, because the answer affects whether you can deduct expenses and whether a loss counts.
Report all of it, slip or no slip
Business income generally includes income from any activity you carry out for profit, and you report gross and net self-employment income on your personal return. Platforms, clients and customers may issue slips, but the obligation does not depend on receiving one. Cash, e-transfers and payments through apps all belong in the records.
The report goes on Form T2125, Statement of Business or Professional Activities, and the totals carry to the self-employment lines of your T1 return. If you run two separate activities, the CRA says a separate form is needed for each. For a line-by-line view, see our T2125 checklist and the guide to being self-employed in Ontario.
Deduct the business part of real costs
As a rule you can deduct a reasonable current expense incurred to earn the income, but only the business part, because personal expenses are not deductible. Typical examples are software, supplies, advertising, platform fees and a share of phone and internet. Purchases of capital property such as a laptop, tools or a vehicle are not deducted in full; they are generally claimed over time through capital cost allowance.
Home and vehicle costs have their own rules and records, covered in our articles on home office expenses and vehicle logbooks. A bank payment alone does not prove deductibility, so keep the receipt and a note of the business purpose. A common mistake is to claim a personal subscription or a family meal because it came out of the business account.
How side income is taxed on top of a job
Net business income is added to your other income and taxed at your personal rates. Because your job already fills the lower brackets, the extra income is taxed at the top of your range. In the 2026 tables, the federal brackets are 14% up to $58,523 and 20.5% from there to $117,045, and the Ontario rates are 5.05% up to $53,891 and 9.15% to $107,785.
Here is an illustrative example. A person earns $70,000 from a job and has side income of $8,000 with $2,000 of eligible expenses, leaving $6,000 of net income. That $6,000 sits in the 20.5% federal and 9.15% Ontario brackets, which is a combined 29.65% before Canada Pension Plan contributions and other effects such as Ontario’s surtax and health premium. Your own result will differ, so treat the figures as a way of thinking, not a forecast.
CPP and the lack of withholding
The CRA notes that you may have to make Canada Pension Plan contributions on your self-employment earnings. Your employer may already be withholding CPP on your job, so the interaction depends on your total earnings. Our article on CPP for self-employment income explains how the calculation works.
The practical point is cash. Nobody withholds tax on side income, so the balance owing for the year arrives at filing time. Set aside part of each payment as it arrives, in a separate account if you can, and use our article on how much tax to set aside as a starting point.
Watch for instalments
The CRA may require quarterly instalments when net tax owing is more than $3,000 in the current year and also in either of the two previous years. For most people with a job, small side income does not trigger them, but a successful second year can. The CRA sends instalment reminders to people who are likely to need them, in February and August, and charges interest and penalties if required instalments are not paid.
If you could be near the line, ask your accountant to estimate the current year and the prior two years before the first reminder arrives. Our article on whether you need to pay tax instalments walks through the options for calculating them.
HST: the $30,000 threshold and what comes first
You must register for a GST/HST account if you are not a small supplier and you make taxable supplies in Canada. Generally you remain a small supplier until you exceed $30,000 in taxable revenue in a single calendar quarter, or over four consecutive calendar quarters. In Ontario the combined rate is 13%, and once registered you charge it, claim input tax credits and file returns.
Two cautions apply. The threshold counts all your taxable revenue, not just profit, and it is measured by calendar quarter rather than tax year. You may also register voluntarily before reaching it, though that creates filing duties. The CRA also notes that for GST/HST purposes a business can include activity carried on whether or not it is for profit. Use our HST registration checker and the registration guide to test your own numbers.
Keep records and know your dates
The CRA generally requires records and supporting documents to be kept for six years from the end of the last tax year they relate to. Keep sales records, platform statements, receipts, bank and card statements, mileage and home-use notes, and a short explanation of any unusual item. Reconstructing a year from memory is slow and rarely complete.
For the 2026 tax year, most self-employed people have a June 15, 2027 filing date, but any balance is still due April 30, 2027. Filing later than the payment date does not stop interest. If you only started in 2026, you may also want to read our guide on setting up CRA accounts for a new business, since which CRA accounts you need, and when, depends on how you operate.
When a side hustle needs more than a spreadsheet
Consider help when income is growing, when customers are other businesses, when you work through an incorporated company, or when you cannot tell whether an activity is a business. A conversation is also worth having before you register for HST or begin claiming home or vehicle costs.
Bring a summary of income by month, expense totals with receipts, any slips, your latest notice of assessment and your job’s T4. Ask about instalments, CPP, HST timing and whether any expenses should be capitalized. If you earned money in past years without reporting it, our guide to catching up on taxes explains the practical steps. This article is general information, not advice for your situation.
Sources & editorial notes
Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- Lines 13499 to 14300 – Self-employment incomeCanada Revenue Agency
- Checklist for small businessesCanada Revenue Agency
- Completing Form T2125Canada Revenue Agency
- Business expensesCanada Revenue Agency
- 2026 personal income tax rates and bracketsCanada Revenue Agency
- Required tax instalments for individuals: Who has to payCanada Revenue Agency
- When to register for and start charging GST/HSTCanada Revenue Agency
- Where and how long to keep recordsCanada Revenue Agency
- 2027 tax deadlines for businesses and self-employed individualsCanada Revenue Agency
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.