Maple News reports that tax season can be particularly challenging for self-employed newcomers to Canada, who face a more complex filing process compared to traditional employees. Unlike salaried workers, self-employed individuals must maintain their own bookkeeping and carefully deduct eligible business expenses from their income when completing their T1 tax return.
Self-employed workers include freelancers, independent contractors, and small business owners. These individuals are responsible for tracking both their income and expenses, categorizing them correctly, and ensuring they claim all eligible deductions. Mistakes in filing can lead to costly outcomes, including paying more tax than necessary or triggering an audit from the Canada Revenue Agency (CRA).
In 2024, the tax deadline for self-employed Canadians is extended to June 17, as the usual June 15 deadline falls on a Saturday. However, the additional time does not reduce the importance of accuracy and completeness. Self-employed newcomers often lack familiarity with Canadian tax rules, making professional support highly advisable.
Improper filing can have serious consequences. Missing deductions means leaving money on the table, possibly resulting in a higher tax bill or reducing a potential refund. Errors in categorizing expenses can also raise red flags, increasing the likelihood of an audit by the CRA—a process that can disrupt business operations and create financial stress.
According to government data from 2023, more than 600,000 self-employed immigrants reside in Canada, contributing significantly to the country’s economy. However, many newcomers may not be fully aware of the rules and paperwork involved in accurate reporting, especially when new to Canadian tax laws.
Maple News recommends that newcomers, especially those considering incorporating their business, seek expert advice. Incorporation carries specific legal and tax implications, particularly for individuals without permanent residency or Canadian citizenship.
Professional tax preparation firms that specialize in self-employment cases can provide substantial support. These include preparing different types of tax returns—personal, small business, rental, corporate, estate, and even U.S. tax filings—along with bookkeeping and payroll services. Leveraging such expertise can not only simplify compliance but also ensure taxpayers maximize their deductions and reduce their audit risk.
Ultimately, for self-employed newcomers building a business or freelance career in Canada, understanding the tax system is essential for financial success and long-term stability.