T1 Filing for the Self-Employed
Every self-employed Canadian files the same personal return — the T1 General — but with an extra schedule: Form T2125, Statement of Business or Professional Activities. This guide walks through the mechanics, the two CRA portals, and the mistakes the CRA flags most often.
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1. What a T1 return is and who must file
The T1 is the individual income tax return required of every Canadian tax resident with taxable income, with non-resident Canadian-source income, or in receipt of certain benefits (Income Tax Act, s. 150). For the self-employed, the T1 is filed by 15 June; any balance owing is still due 30 April (s. 156.1, s. 161).
2. Form T2125 — Statement of Business Activities
T2125 is the schedule on which sole proprietors and partners (other than corporate partners) report gross revenue, deduct expenses, claim Capital Cost Allowance (CCA), and arrive at net self-employment income that flows to T1 line 13500/13700. CRA Guide T4002 is the controlling plain-English authority.
- Part 1 — Identification & industry code (NAICS)
- Part 3A/3B — Gross revenue (business or professional)
- Part 4 — Cost of goods sold (if applicable)
- Part 5 — Operating expenses
- Part 7 — Business-use-of-home
- Area A–F — CCA classes & motor vehicle expenses
3. Gross revenue → expenses → net income
Report gross revenue (before GST/HST collected and before deducting platform fees). Deduct only expenses that are reasonable and incurred to earn business income (ITA, s. 18(1)(a), s. 67). The result — net self-employment income — is what CPP, EI opt-in, RRSP room and marginal-rate brackets all key off.
4. Filing methods
- NETFILE via certified software (TurboTax, Wealthsimple Tax, UFile, StudioTax, etc.) — instant, free for most
- Paper — mailed to the CRA tax centre that matches your province (slower, no instant Notice of Assessment)
- EFILE through an accountant — required path if you want a professional to transmit on your behalf
5. CRA My Account vs My Business Account
Two separate portals
6. First-time filer checklist
- Get a Social Insurance Number (already required if you have any T-slips)
- Decide if you need a Business Number (required for GST/HST, payroll, or import) — register via Business Registration Online
- Choose your fiscal year — almost all sole proprietors use 31 December (s. 249.1)
- Keep books from day one — bank statements, receipts, mileage log, home-office area measurement
- Track GST/HST collected separately from revenue once registered
- Pick filing software and set a calendar reminder for 30 April (payment) and 15 June (return)
7. Common T1 mistakes the CRA flags
- Reporting net platform payouts instead of gross — under-reports income, mis-states GST/HST exposure
- Claiming 100 % of vehicle costs with no logbook (Information Circular IC78-10R5)
- Mixing personal and business bank accounts then estimating splits
- Forgetting CPP contributions — Schedule 8 is mandatory on self-employment income
- Missing the 15 June deadline thinking 30 April applies (it doesn't, for filing)
- Claiming home-office at 100 % of utility bills instead of business-use %
Related calculators
Canadian Income Tax Calculator — see the marginal-rate impact of your T2125 net income.
CPP & EI Calculator — confirm your Schedule 8 contribution.
Instalment Payments Guide — for when your T1 balance exceeds $3,000.
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