Side Hustle Tax Calculator

Your side income doesn’t get its own fresh set of low tax brackets. Because your T4 salary has already “used up” the lower brackets, every dollar of side income is taxed at your highest marginal rate. Someone earning $60,000 at their day job is in a bracket where each extra dollar of side income is taxed at roughly 30% combined federal and provincial — far more than the “average” rate on their salary. That gap between average rate and marginal rate is why a $10,000 side hustle can create a tax bill far bigger than people expect.

As an employee, you pay about 5.95% of eligible earnings toward CPP and your employer pays the other 5.95%. When you’re self-employed, you are both employee and employer, so you owe the full 11.9% yourself on net side income above the $3,500 basic exemption. On $13,000 of net side income that’s over $1,500 in CPP alone, entirely separate from income tax. Paying self-employed CPP does build your future CPP retirement benefit, so it’s not purely lost money.

You only pay tax on your net side income — what’s left after legitimate business expenses. If you made $15,000 on the side but spent $2,000 on business-related costs (vehicle, phone, software, supplies, home office), you’re taxed on $13,000, not $15,000. Tracking expenses honestly is the single biggest lever you control. Use the Self-Employed Expense Calculator to break down common deductible categories.

Once your gross self-employed revenue passes $30,000 over four consecutive quarters, you generally must register for and charge GST/HST. Below that, registration is optional. One major exception: ride-share drivers (Uber, Lyft) must register for GST/HST from their very first fare — there is no $30,000 grace threshold for ride-share. Delivery-only work generally follows the normal threshold. Use the GST/HST Registration Checker if your revenue is approaching that level.

Tax on side income isn’t withheld automatically like your paycheque, so you pay it at filing time — or, once your tax owing gets large enough, through quarterly instalments. A practical rule of thumb: park 25–30% of your net side income in a separate savings account as you earn it, so the bill is covered when filing arrives. Use the Tax Instalment Calculator to see whether quarterly CRA payments may apply to you.

A safe rule of thumb is 25–30% of your net side income (after expenses), but your real number depends on your day-job salary and province — the higher your salary, the higher the marginal rate, because side income stacks on top. Use the calculator above for a figure based on your actual situation.

Yes. There is no minimum threshold for reporting self-employment income to the CRA — even a few hundred dollars is technically taxable and must be declared on your T1. The $30,000 figure people often remember is the GST/HST registration threshold, not an income-reporting threshold.

Income tax and CPP work the same way, but ride-share drivers must register for and charge GST/HST from their first dollar of fares — they don’t get the usual $30,000 threshold. Delivery-only work (food couriers) generally follows the normal $30,000 threshold; ride-share is the special case.

Any reasonable expense incurred to earn the income: the business-use portion of vehicle costs, phone and internet, software and subscriptions, supplies, professional fees, and a home-office portion if you work from home. You can only deduct the business-use share, and you should keep receipts. The Expense Calculator can help estimate common categories.

You report self-employment income on your annual tax return (T2125 form) and pay any balance owing by the filing deadline. If your tax owing exceeds the CRA threshold two years running, you’ll be asked to make quarterly instalment payments in advance going forward.

Yes — paying self-employed CPP increases your future CPP retirement benefit. It’s a real cost now but not purely lost money; it builds your contribution record the same way payroll deductions do for employees.