Many people mistakenly believe that small side jobs do not need to be reported. However, the Canada Revenue Agency (CRA) requires individuals to report all income earned—including side hustles and freelance work.

This includes income from activities such as:

• Freelance work
• Consulting services
• Online product sales
• Rideshare driving
• Rental income
• Digital content creation

Even if you earn only a few thousand dollars, it must be included on your tax return.

One advantage of a side hustle is the ability to deduct legitimate business expenses. These deductions reduce your taxable income.

Common deductible expenses include:

• Advertising and marketing
• Office supplies
• Internet and phone costs
• Vehicle expenses for business use
• Home office expenses

For example, if you operate a small online business from your home in Toronto or Mississauga, you may be able to deduct a portion of your rent, utilities, or internet expenses if they are used for business purposes.

Self-employed Canadians must contribute to the Canada Pension Plan (CPP) on their business income. Unlike employees who share CPP contributions with employers, self-employed individuals pay both portions themselves.

For 2025, the CPP contribution rate for self-employed individuals is 11.9% on eligible income, up to the yearly maximum.

Planning for this expense prevents unpleasant surprises at tax time.