Side Hustle Taxes
What side income to report, what it costs in tax and CPP, what you can deduct, and when GST/HST starts.
The short version
- Side income is taxable from the first dollar. There's no minimum amount you can earn tax-free on the side.
- Gig, freelance and resale income usually goes on form T2125 as business income, where you can deduct the expenses of earning it.
- On top of income tax, you pay both halves of CPP on side-business profit above $3,500 for the year.
- GST/HST registration starts once your taxable sales pass $30,000 in four consecutive calendar quarters, except rideshare drivers, who must register from their first fare.
- Since 2024, many apps and marketplaces report sellers' earnings directly to CRA, and give you a copy by January 31.
Side Hustle Taxes in Canada
A side hustle is a small business with a better name. The tax rules are the same as for any other small business, which is good news (you get deductions) and bad news (you get CPP, and nobody withholds tax for you). The first April after a good side-hustle year is when most people learn the second part. Here's how to avoid learning it that way.
What Counts as Side Income
| Activity | Usually | Where it goes |
|---|---|---|
| Food delivery, rideshare, task apps | Business income | T2125; see delivery driver taxes and rideshare taxes |
| Freelance writing, design, tutoring, consulting | Business or professional income | T2125; see freelancer taxes |
| Selling things you make, or buy to resell | Business income | T2125; see online seller taxes |
| YouTube, streaming, sponsorships, affiliate income | Business income (including free products you receive for promotion) | T2125 |
| Renting a room or your place short-term | Rental income, or business income if you provide services like a hotel | T776 or T2125; see Airbnb taxes |
| Selling your own used belongings at a loss | Generally not taxable | Nothing to report |
| Cash jobs: snow clearing, painting, babysitting | Business income | T2125; see cash income and taxes |
If the activity is more passion project than business, the answer can change; see hobby vs business. But if you regularly sell to make money, plan on reporting it.
How Much Tax on a Side Hustle?
Side income is stacked on top of your job, so it's taxed at your marginal tax rate, plus self-employed CPP.
| Ontario, 2026: $60,000 salary plus $15,000 side-hustle profit | Approximate extra cost |
|---|---|
| Extra income tax | $4,150 |
| Self-employed CPP (both halves) | $1,770 |
| Total | about $5,920, or roughly 39% of the profit |
That's why the usual advice is to put 30% to 40% of side-hustle profit in a separate savings account the day it arrives. Your own numbers are on the self-employed tax calculator, and the reasoning is on how much to save for taxes. If your net tax owing is more than $3,000 this year and was also over $3,000 in either of the two previous years, CRA will start asking for quarterly instalments.
How much tax will my side hustle cost?
Enter your job income, province and side-hustle profit. The assistant estimates the extra income tax and CPP, the amount to set aside per month, and whether you're near the GST/HST threshold.
What You Can Deduct
Because it's a business, you report gross income and subtract the costs of earning it. Common side-hustle deductions:
- Platform and payment fees (the platform reports your gross earnings, not your net)
- The business share of your vehicle, with a mileage log; see vehicle expenses
- The business share of your phone and internet
- Supplies, materials and inventory you sold
- Equipment, through capital cost allowance; see tools and equipment
- A workspace at home, if you meet the conditions; see home office expenses
The full list is on business expense deductions. Personal costs don't become deductible just because you sometimes use them for the side hustle; only the business share counts.
GST/HST: The Part People Miss
Most side hustles can ignore GST/HST until taxable sales pass $30,000 over four consecutive calendar quarters. After that you have to register, charge and remit. Two exceptions catch people early:
- Rideshare drivers (passenger transport through apps) must register from the first dollar, whatever their income.
- Delivery drivers follow the normal $30,000 rule.
The test counts all your businesses together, and it's about sales, not profit. Check yours with the GST/HST registration calculator.
Get your GST/HST set up right the first time
The GST/HST SmartFile runs both $30,000 tests on your sales, compares the quick method with the regular method, and fills in form GST74 if the quick method wins.
CRA Can See More Than You Think
Under the reporting rules for digital platform operators, platforms that help sellers provide goods, services or short-term rentals report sellers' identities and payments to CRA every year, starting with 2024 activity. The platform also sends you a copy by January 31. Payments from businesses that hire you may show up on a T4A slip. And a bank account that receives far more than your reported income is the oldest audit trigger there is. Report the income; take the deductions.
Already Skipped a Year or Two?
Fix it before CRA asks. Adding missed income through Change My Return or a voluntary disclosure usually costs the tax plus interest, and avoids the bigger penalties for unreported income, including the 10% repeated-failure penalty and the 50% gross negligence penalty. See how to change a tax return and late filing penalties.
Side Hustle Checklist
- Open a separate bank account for side income.
- Save every receipt and keep a mileage log from day one.
- Move 30% to 40% of each payment into a tax account.
- Watch your sales against the $30,000 GST/HST threshold (or register now if you drive rideshare).
- Report everything on T2125 and keep the platform statements; see what receipts to keep.
Return Check compares your T2125 with your platform statements and slips before you file, so a mismatch is caught by you and not by CRA.
Side Hustle Tax Questions
How much can you make on a side hustle before paying tax in Canada?
There is no tax-free amount for side income. Business profit is taxable from the first dollar, although your overall income may be low enough that little or no tax is owed.
Do I pay CPP on side hustle income?
Yes, if your net self-employment earnings are more than $3,500 for the year. You pay both the employee and employer shares on that profit, up to the annual maximum.
Do I need to register for GST/HST for a side hustle?
Only once your taxable sales pass $30,000 over four consecutive calendar quarters, unless you drive for a rideshare app, in which case you must register from your first fare.
Does CRA know about my side hustle income?
Often, yes. Since 2024, digital platforms report many sellers' earnings to CRA each year, and businesses that pay you may issue T4A slips.
Where do I report side hustle income on my tax return?
Usually on form T2125, Statement of Business or Professional Activities, with the net amount on line 13500, 13700 or 13900 of your return.
Sources: CRA, Gig economy; Using an app or website to earn income; Tax obligations for ridesharing and delivery; False reporting or repeated failure to report income. Checked October 2026. The example is estimated with our 2026 Ontario rules engine; your result depends on your province and other income.
Last reviewed October 4, 2026 against CRA and Government of Canada sources. How we check our facts.