Do I have to report a small side hustle on my Canadian taxes?

Arsen Accounting Services · Sources checked October 27, 2026

A side hustle does not become tax-free because it is small, paid in cash or carried on alongside a regular job. If your activity produces business income, that income must be reported. For a sole proprietor, this normally means reporting business income and eligible expenses with the personal T1 return using Form T2125. CRA — Tax obligations in the platform economy

Start with what the activity actually involves

Describe what you sell or do, how you find customers and how you are paid. Freelancing, online reselling, paid content and contract services can raise different questions from an employment job. If you are unsure whether the work is employment or self-employment, resolve that classification first. It affects which reporting and expense rules apply. CRA — Tax obligations in the platform economy

Selling a personal possession and buying goods to resell are not automatically the same situation. Keep records and explain the activity rather than labelling every online payment as either a hobby or a business.

Report the business income, not just the bank deposit

Prepare a sales summary from invoices, platform statements and other records. Identify gross sales, refunds, fees and taxes collected separately. Where a platform deducts its fees before paying you, the deposit alone may not explain the transaction. Business income can also include non-cash amounts, including certain products or services received through influencer activities. CRA — Reporting business income on Form T2125

A practical monthly worksheet should show the date, customer or platform, gross amount, deductions from the payout and amount received. Reconcile the worksheet to your bank records so you can explain differences instead of overlooking them.

Claim supported expenses for the business activity

Keep receipts and invoices showing what you bought, when and from whom. Potential categories include supplies, advertising and platform fees, depending on the facts. A business purpose and supporting record are essential. If you sell inventory, the cost of goods sold requires attention to the stock still on hand at year-end. CRA — Business expenses and records

Do not treat every purchase as an immediate deduction. A long-lasting asset may be a capital purchase with different treatment from an ordinary operating expense. Flag equipment separately for review. CRA — Current or capital business expenses

The $30,000 figure is a separate GST/HST question

The small-supplier threshold does not let you leave business income off your T1. GST/HST registration follows its own sales tests and exceptions; it is not simply based on your profit. See our guide to the $30,000 GST/HST threshold before deciding whether to charge tax.

Your final personal tax result also depends on other income, deductions and tax already withheld. In Ontario, self-employment can create CPP obligations covering both the employee and employer portions, subject to the applicable rules and limits. A single percentage of sales will not reliably predict everyone’s tax bill. CRA — Tax obligations in the platform economy

Common questions

Do I report the income if I did not receive a T4A?

Keep and use your business records. Reporting does not depend on a customer or platform issuing a slip for every payment. CRA — Reporting business income on Form T2125

What should I do now to avoid a year-end scramble?

Update the income summary monthly, save expense documents and keep a separate list of equipment, inventory and mixed personal-business purchases. Review expected tax and any instalment obligations before spending all the cash received.

Prepare your first self-employed return

Tell Arsen Accounting what the activity is, when it began and whether you also have employment or rental income. Our self-employed tax preparation service and document checklist give you a starting point.

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