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TAX TIP Are you self-employed? The Canada Revenue Agency can help you understand your tax obligations

Friday, 15 April 2022 02:22.PM
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If you're self-employed, we understand that navigating your tax obligations may seem complicated. But don't worry! The Canada Revenue Agency (CRA) is focused on supporting you. To get ready for tax-filing season, we've put together helpful tips and information for self-employed individuals.

The 2021 tax-filing deadline for self-employed individuals is June 15, 2022

You have until June 15, 2022 to file your 2021 tax return if you or your spouse or common law-partner are self-employed.

The 2021 payment deadline is April 30, 2022

Although your 2021 tax-filing deadline is June 15, 2022, your payment is still due on April 30, 2022 .

Since April 30, 2022, falls on a Saturday, your payment will be considered paid on time if we receive it, or it is processed at a Canadian financial institution, on or before May 2, 2022.

If you filed your 2020 income tax and benefit return and qualified for interest relief, you have until April 30, 2022 to pay any outstanding income tax debt for the 2020 tax year to avoid future interest charges. This applies to the tax owing for the 2020 tax year only, and not for any previous tax year.

Even if you owe tax, don't risk having your benefits interrupted by not filing. If you cannot pay your balance owing, we can work with you on a payment arrangement.

Liaison Officer service

We offer a free Liaison Officer service to owners of small businesses and self-employed individuals to help them understand their business tax obligations. A visit (by phone or videoconference) from a Liaison Officer is 100% confidential; the information you choose to discuss with a Liaison Officer will not be shared with other areas of the CRA, or anyone else.

You can request a visit by phone or videoconference here.

Online tools to help you file
Don't waste time! Sign up for direct deposit and file online to get any refund you may be entitled to faster and to avoid delays.

Using the CRA's digital services is the fastest and easiest way to view and manage your tax and benefit information. The CRA also encourages you to sign up for My Account and My Account ahead of time, and gather all your information for filing your return.

The CRA's Get ready to do your taxes page has information on online filing, deadlines, and other helpful links.

COVID-19 benefits

If you received federal, provincial or territorial government COVID-19 assistance for your business, you have to include these amounts in your business income or reduce your expenses by the amounts you received. This includes amounts from COVID-19 assistance such as:

• Canada Emergency Wage Subsidy (CEWS)
• Canada Emergency Rent Subsidy (CERS)
• Tourism and hospitality Recovery Program (THRP)
• Hardest-Hit Business Recovery program (HHBRP)
• Canada Recovery Hiring Program (CRHP)
• Local Lockdown Program

If you received a government loan (such as from the Canada Emergency Business Account (CEBA) program), the loan is not taxable but you have to include in your business income any portion of the loan that is forgivable.

If you received benefits issued by the CRA in 2021, such as the Canada Recovery Benefit (CRB), Canada Recovery Sickness Benefit (CRSB) and Canada Recovery Caregiving Benefit (CRCB), a T4A information slip should have been mailed to you by the end of February 2022. Residents of Quebec should have received a T4A slip and an RL-1 slip.

T4A information slips from the Government of Canada for COVID-19-related benefits are also provided online if you're registered for My Account and have full access. To have full access to My Account, you need to enter the CRA security code we issued to you after completing the first step of the My Account registration process.

T4A information slips, including information for COVID-19-related benefits, are also available when using the Auto-fill my return service in certified tax filing software. This service automatically fills in parts of an income tax and benefit return with information that the CRA has on file. To use the service, you must be registered for My Account.

If you received a T4A and/or RL-1 slip, but did not apply for or receive recovery benefit payments, please contact the CRA as soon as possible by calling 1-800-959-8281.

When COVID-19 benefits were paid, some tax was withheld at source. If you end up owing more tax on top of that, we understand that payment could present significant financial hardship. In that case, our expanded payment arrangements could work for you. This will give you more time and flexibility to repay based on your financial situation. In some circumstances, you may ask for relief from penalties and interest, and reduce the amount you owe. Go to canada.ca/penalty-interest-relief for more information.

There may be other effects to filing your return that are specific to the COVID-19 benefit(s) you received, or if you're a resident of Quebec.

Support for farmers

Beginning in the 2021 year, the Government of Canada proposed a new refundable tax credit, the Return of Fuel Charge Proceeds to Farmers Tax Credit, as a means to return a portion of the fuel charge proceeds from the federal carbon pollution pricing system directly to farming businesses in provinces that do not currently have a system that meets the federal requirements. These designated provinces are Alberta, Manitoba, Ontario and Saskatchewan. The credit amount is proportional to the amount of eligible farming expenses attributable to the designated provinces. For 2021, if you're a farmer in a designated province with eligible farming expenses of $25,000 or more, you can expect to receive a credit of $1.47 per $1,000 in eligible farming expenses increasing to $1.73 in 2022. Form T2043, Return of Fuel Charge Proceeds to Farmers Tax Credit, would need to be completed in order to calculate the amount of the credit.

The draft legislation that includes this credit has not yet received Parliamentary approval. We still encourage Canadians who are eligible to claim this credit to file their 2021 income tax and benefit returns on time.

Once the legislation has received Parliamentary approval, the CRA will process the returns with the Return of Fuel Charge Proceeds to Farmers Tax Credit.

Payments

If you need to make a payment to the CRA, there are online options that are faster, easier, and more secure than mailing a cheque.

There are many ways to make a payment:

• using your financial institution's online banking or telephone service
• using the CRA's pre-authorized debit service offered through My Account and the MyCRA mobile web app, which lets you:
-- -- set up a payment to the CRA from an account on a pre-set date
-- -- pay an overdue amount or make instalment payments
• through the CRA's My Payment service service, which lets you make payments online. You can use this service if you have Visa® Debit, Debit MasterCard® or Interac® Online at a participating financial institution
• by credit card, PayPal or Interac e-Transfer through a third-party service provider

If you still wish to make a payment in person, you can pay:

• at any Canada Post outlet, using cash or a debit card, along with a QR code that you can generate using My Account or the MyCRA mobile web app
• at your Canadian financial institution with a remittance voucher

To see all the payment options, go to our Payments to the CRA page.

Things to keep in mind:

• On your return, you have to enter your income from any business you run yourself or with a partner.
• In Canada, generally a self-employed individual must register for GST/HST if their revenue (along with the revenue of all associated persons) from worldwide taxable supplies is more than $30,000 in one calendar quarter or over the last four consecutive calendar quarters.
• If you own a business or engage in commercial activities, keep thorough records. Your records must have enough information so you can figure out the tax you owe and are able to support your income and expense claims, as well as any deduction or credit you claim. Your records have to be supported by original documents. Electronic versions of these documents are acceptable.
• If you work in the gig economy, find out what you need to know with our gig economy tax tip. The gig economy is based on temporary and freelance work, or short-term contracts ranging from a small task to a highly specialized service.
• In case the CRA reviews your return, keep your documents even if you don't have to attach certain supporting documents to your return or you are filing online. The CRA may ask you to prove your claims for deductions or credits with documents like cancelled cheques or bank statements.
• Keep supporting documents and all required records for six years from whichever date is later:
-- -- the end of the tax year to which they relate
-- -- the date your return was filed (if you did not file your return on time)
• If you earn income that has no tax withheld, or does not have enough tax withheld during the year, you might have to pay tax by instalments. This may happen if you:
-- -- have rental, investment, or self-employment income
-- -- receive certain pension payments
-- -- have income from more than one job

For more information, go to our Small businesses and self-employed income page. You can also check out our questions and answers about filing your taxes page for more answers to common questions. This page will be updated periodically to incorporate changes that may affect you during tax-filing season.

SOURCE: Canada Revenue Agency

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