Freelancer Tax in Canada: GST/HST, T2125 & CPP (2026)

Canada layers three sales taxes, and the rate on your invoice depends on where the client is located, not where you live.

• GST-only provinces (5%): Alberta, Northwest Territories, Nunavut, Yukon
• HST provinces (combined federal + provincial): Ontario 13%, New Brunswick / Newfoundland and Labrador / Nova Scotia / PEI 15%
• GST + separate PST/RST: British Columbia 5%+7% PST, Saskatchewan 5%+6% PST, Manitoba 5%+7% RST
• GST + QST: Quebec 5% GST + 9.975% QST (administered by Revenu Québec, not the CRA)

In HST provinces you charge one combined rate and remit it all to the CRA. In PST provinces you usually only need to register for the provincial tax if you sell taxable goods — most freelance services are exempt from PST in BC, Saskatchewan, and Manitoba (always check the provincial rules for your specific service).

You are a small supplier — and not required to register for GST/HST — as long as your worldwide taxable revenue stays at or below $30,000 CAD over four consecutive calendar quarters (or in any single quarter).

Once you exceed $30,000:

• Your small supplier status ends immediately on the sale that pushed you over
• You must start charging GST/HST on the very next taxable supply
• You have 29 days to register with the CRA and receive your GST/HST number

Voluntary registration: Many freelancers register before hitting the threshold to claim Input Tax Credits (ITCs) on business purchases like laptops, software, and home-office costs. Once you register, you must charge GST/HST on every invoice, no matter how small.

As a sole proprietor you don't file a separate corporate return. Instead, you attach Form T2125 (Statement of Business or Professional Activities) to your personal T1 return each year.

T2125 captures:

• Gross business income (before GST/HST you collected)
• Cost of goods sold (if applicable)
• Expenses by category — advertising, meals (50%), office supplies, professional fees, telephone/internet, vehicle, business-use-of-home
• Capital cost allowance (CCA) for depreciation of equipment
• Net business income, which flows to line 13500 (business) or 13700 (professional) of your T1

Keep receipts for six years after the end of the tax year — the CRA can request them at any time.

Employees split CPP with their employer. Self-employed Canadians pay both halves, so the effective rate is double.

For 2026:

• Base CPP: 11.9% on pensionable earnings between the $3,500 basic exemption and the Year's Maximum Pensionable Earnings (YMPE — approximately $74,600)
• CPP2 (second additional contribution): 8.00% on earnings between the YMPE and the Year's Additional Maximum Pensionable Earnings (YAMPE — approximately $85,000), up to about $832 maximum

CPP is calculated on Schedule 8 of your T1 and added to your tax bill. EI is optional for the self-employed — only if you opt in for special benefits (parental, sickness).

If your net tax owing is more than $3,000 in the current year and in either of the two previous years (or $1,800 in Quebec because of QPP), the CRA requires you to pay tax in quarterly installments:

• March 15
• June 15
• September 15
• December 15

The CRA will mail you an installment reminder calculating the amount under the no-calculation option (based on your two most recent returns). You can also use the prior-year option or the current-year option if your income drops — but if you under-pay, the CRA charges installment interest at the prescribed rate, compounded daily.

Missing an installment is one of the most common causes of unexpected CRA interest charges for freelancers.

If you're registered for GST/HST, every invoice must include:

• Your business name and address
• Your GST/HST number (9-digit BN + RT0001)
• Invoice date and a unique invoice number
• Client's name (required for invoices over $150)
• Description of the goods or services
• Subtotal before tax
• GST/HST shown separately with the rate (e.g., "HST 13%")
• Total including tax

For invoices in Quebec you must also show the QST registration number and the QST amount on a separate line. The CRA can deny a client's Input Tax Credit if your invoice is missing any of these fields — clients will push back hard, so get it right the first time.

Mistake 1: Forgetting to register the day you cross $30,000. The CRA can back-assess GST/HST on every invoice issued after the threshold, even if you didn't collect it from the client.

Mistake 2: Charging the wrong provincial rate. The rate is based on the place of supply — usually the client's address, not yours. A Toronto freelancer billing an Alberta client charges 5%, not 13%.

Mistake 3: Mixing GST/HST collected with personal cash flow. The tax you collect is the CRA's money. Move it to a separate account on the day you're paid.

Mistake 4: Skipping quarterly installments because "it'll balance out at year-end." It won't — the CRA charges compounding installment interest, and there's no grace period.