Kupovics & Associates Accounting and Tax

02/24/2026

8 Tax-Filing Tips for Sole Proprietors in Canada (2026 Tax Year Guide)
Being a sole proprietor or self-employed professional often means wearing every hat – running your business, managing your books, and filing your taxes on time.

Unlike employees, no one withholds taxes on your behalf, so missing a deadline or underpaying can quickly lead to penalties and interest. Understanding your tax obligations early helps you avoid costly surprises.

As of February 23, 2026, you can begin filing your 2025 income tax and benefit return online through NETFILE.

Most sole proprietors and self-employed individuals must file their 2025 return by June 15, 2026. This deadline also applies if your spouse or common-law partner is self-employed.

However, if you owe taxes, payment is due by April 30, 2026. Any unpaid balance will begin accruing compound daily interest starting May 1, 2026.

8 Tax-Filing Tips for Sole Proprietors and Self-Employed Individuals in Canada
Here are eight things sole proprietors and self-employed professionals in Canada need to know to correctly file their annual tax returns:

1. Understand What You Need to File
Sole proprietors are required to report business income and expenses on their personal tax returns.

Even if your business earned little income, operated at a loss, or was inactive, you must still file using Form T2125 (Statement of Business or Professional Activities) as part of your T1 personal return.

You also need to file a T1 return, including if you:

Disposed of a capital property or had a taxable capital gain
Need to make Canada Pension Plan (CPP) contributions
Want to access Employment Insurance (EI) special benefits
Received a request from the Canada Revenue Agency (CRA) to file
Are claiming a refund, GST/HST credit, Canada Child Benefit, or provincial credits
It’s recommended that you speak to an accountant or tax-filing advisor to ensure that you file the correct type of return.

2. File Your Return on Time
Even if your business didn’t turn a profit in 2025, you still need to file on time. Late filing can result in penalties and interest that quickly increase the amount you owe.

If you owe but don’t have the funds to pay the balance in full, the CRA offers payment arrangements to make it easier.

The CRA now delivers most correspondence electronically through the My Business Account portal. Notices, statements, and requests are no longer mailed by default, so it’s important to regularly check your account and keep your contact information up to date.

3. Set Money Aside Throughout the Year
If you operate a sole proprietorship – especially alongside a salaried job – you may be surprised by how much you owe at tax time. Unlike employment income, taxes and CPP contributions aren’t automatically deducted from your business income.

Being a sole proprietor means you are responsible for figuring out your taxes and other payments owed. If you wait until tax time and don’t set money aside over the year, you may find yourself owing a large sum of money you cannot easily pay. It’s helpful to also budget for RRSP contributions, as these can offset the taxes you will owe.

A common rule of thumb is to set aside 25% to 30% of your net income for taxes, depending on your province and income level.

Finally, you are also required to register for a GST/HST number once your business makes $30,000 or more in 12 months. This means that if your business revenue exceeds this threshold, you need to start collecting and remitting GST/HST. Therefore, you need to set aside those payments, too.

4. Be Prepared to Pay in Installments
According to the CRA, you have to pay in installments for 2025 if:

Your net tax for 2025 will be more than the threshold amount for your province or territory (between $1,800 to $3,000, depending on where you live).
Your net tax owing in either 2024 or 2025 was above the threshold for your province or territory.
The CRA will email reminders when you need to pay income tax and GST/HST installments, but these are easy to miss, especially if they have an old address or email on file for you, so make sure you keep on top of it.

5. Don’t Delay Paying If You Owe Money
If you are not required to pay in installments, the deadline for payment is April 30, 2026.

If you’re required to pay in installments, missed or late payments can result in ongoing interest charges.

If you’re unsure how much you owe, it’s better to estimate and pay early than wait. Any overpayment will be refunded once your return is processed.

6. Keep Track of Payments and Business Expenses
If you wait until tax time to start looking through that shoebox full of receipts, you’ll be in for a long night. It will be easy to miss a lot of things. Keeping records up to date throughout the year can save hours of stress and help ensure you don’t miss deductions.

Consider having a separate bank account and credit card for your business. Being diligent about using these only for business expenses and deposits will help keep things straight when sorting them later.

Using accounting software or a simple spreadsheet can also make it easier to track income, expenses, and tax payments throughout the year.

7. Know What Business Expenses You Can Deduct
One of the biggest advantages of being self-employed is the ability to deduct or “write off” legitimate business expenses, which can significantly lower your taxable income. If you work out of your home, “business use of home” expenses mean you can claim a portion of:

Your mortgage or rent
Home repairs
Home utilities like heat, water, etc.
Phone, internet
Your home insurance and taxes
Other things you can claim as a sole proprietor include:

Motor vehicle expenses (keep a logbook of mileage)
Business parking, transit, travel, hotel rooms
Food and entertainment (if business-related)
Product inventory, office supplies, and other tools
Marketing, professional memberships, websites
Business advisories such as accountants, lawyers, courses, coaches
Office space rental and utilities
Liability insurance

8. Know When and Where to Get Help
If you need direction on which specific forms you’ll need to submit for your business, the CRA has a list here.

Information for sole proprietorships on income tax payments and registering for the GST/HST.

11/27/2025

Christmas Time at Kupovics & Associates!

03/04/2023

The Ontario Staycation Tax Credit.

Did you know that if you took a vacation in Ontario in 2022, you are eligible to claim a credit on some of the costs of that vacation.

The Credit amounts to 20% of accommodation costs, to a maximum of $1000 per individual and $2000 for a family. This could provide from $200 to $400 in tax savings.

Here is the detail from the Province of Ontario.

Overview
The temporary Ontario Staycation Tax Credit for 2022 aims to encourage Ontario families to explore the province, while helping the tourism and hospitality sectors recover from the financial impacts of the COVID‑19 pandemic.

Ontario residents can claim 20% of their eligible 2022 accommodation expenses, for example, for a stay at a hotel, cottage or campground, when filing their personal Income Tax and Benefit Return for 2022. You can claim eligible expenses of up to $1,000 as an individual or $2,000 if you have a spouse, common-law partner or eligible children, to get back up to $200 as an individual or $400 as a family.

The credit will provide an estimated $270 million in support to about 1.85 million Ontario families.

Who is eligible
You are eligible to claim the credit if you are an Ontario resident on December 31, 2022.

Only one individual per family can claim the credit for the year. Your claim can include the eligible expenses of your spouse or common-law partner and your eligible children. An eligible child is not entitled to claim the credit.

If you do not have a spouse or common-law partner, or eligible child, you can claim your own eligible expenses for the credit.

Eligible expenses
You can claim the Ontario Staycation Tax Credit for accommodation expenses for a leisure stay of less than a month in Ontario, at a short-term accommodation or camping accommodation, such as a:

hotel
motel
resort
lodge
bed-and-breakfast establishment
cottage
campground
vacation rental property
The tax credit only applies to leisure stays between January 1, 2022, and December 31, 2022, regardless of the timing of payment for the stays.

The accommodation expenses must have been paid by you, your spouse or common-law partner, or your eligible child, as set out on a detailed receipt provided by a supplier registered for the Goods and Services Tax (GST)/Harmonized Sales Tax (HST).

As long as all other conditions are met, you can claim any of the following expenses:

accommodation for a single trip or multiple trips, up to the maximum expense limit of $1,000 as an individual or $2,000 as a family
accommodations booked either directly with the accommodation provider or through an online accommodation platform
the portion of the expense that is necessary to have access to the accommodation
the accommodation portion of a tour package expense
You must keep your detailed receipts for any eligible expenses you claim for the credit. Those receipts must include:

the location of the accommodation
the amount that can reasonably be considered to be for the accommodation portion of a stay
the amount of any GST/HST paid
the date of the stay
the name of the payor
Ineligible expenses
Short-term accommodation would generally not include a timeshare agreement, or a stay on a boat, train or other vehicle that can be self-propelled.

The tax credit cannot be claimed for:

travel expenses that are not for short-term accommodation or camping accommodation, such as expenses for car rentals, fuel, flights, groceries, parking, or prices of admission into local attractions and places of interest
accommodation expenses reimbursed to you, your spouse or common-law partner, or your eligible child, by any person, including by a friend or an employer
expenses that are incurred for school or educational purposes, or for a work, employment or business purpose, or that can be claimed for a medical expense tax credit
How to claim the credit
You can claim the credit on your personal Income Tax and Benefit Return for 2022.

The Ontario Staycation Tax Credit is a refundable personal income tax credit. This means that if you are eligible, you can get this tax credit regardless of whether you owe income tax for 2022.

03/02/2023

Changes to the 2022 Tax Season

1. Repaying COVID-19 benefits
If you received COVID-19 benefits from the CRA in 2022, such as the Canada Recovery Benefit (CRB), Canada Sickness Recovery Benefit (CSRB) or Canada Recovery Caregiving Benefit (CRCB) you will receive a T4A slip with the relevant information you need for your tax return.

If you received the CRB and your net income after certain adjustments is more than $38,000, then you may have to repay all or part of the benefits you received in 2022.

If you have repaid all or parts of COVID-19 benefits in 2022, you can choose which year to claim the tax deduction. You can either claim the deduction in the year you received the benefit, or the year you repaid it.

Plus, any one-time provincial payments to help you through COVID-19 will not be taxable, and you don’t need to report them as income on your 2022 tax return.

2. You can claim up to $500 for work-from-home expenses
Making a return from last year, you can once again claim the work-from-home tax credit. If you’ve been keeping track of your expenses, you can go ahead and claim your calculated total. Otherwise, you can use the flat rate method of $2 for each day worked from home during the pandemic.

3. The Basic Personal Amount (BPA) has been increased
As part of their policy to continue increasing it over time until it reaches $15,000 in 2023, the government increased the Basic Personal Amount for the 2022 tax year to $14,398. This means that every Canadian will get a slight boost to their return this year, and it’s likely you can expect another increase next year as well.

4. Tax brackets have shifted to account for inflation
The government has adjusted tax brackets for 2022 to maintain buying power for Canadians as prices of goods continue to slowly increase.

The new federal tax brackets for 2022 are as follows:

$0 to $50,197 of income (15%)
More than $50,197 to $100,392 (20.5%)
More than $100,392 to $155,625 (26%)
More than $155,625 to $221,708 (29%)
$221,708.01 and higher (33%)
The adjustment upwards means that Canadians on the edge of a tax bracket might find themselves shifted into a lower bracket this year and pay less taxes because of it.

5. The TFSA limit has been increased
The TFSA contribution limit has increased to $6,500 for the year. This means that if you’ve had an account since 2009, were 18 years of age and have been a resident of Canada throughout that period, the cumulative total you can have in your TFSA is now $81,500.

6. New OAS limit amounts
The OAS is designed to provide retirees with a source of income to support their retirement. However, if your income is over certain limit amounts, you might find your OAS amount reduced, and even canceled entirely.

For the 2022 tax year, if your taxable income was over $81,761, you would need to repay some of your OAS. Similarly, if your taxable income was over $134,626, you would not have received any OAS payments. Thanks to the CRA’s new Affordability Plan, seniors aged 75 and over received an automatic 10% increase of their Old Age Security pension, as of July 2022.

7. Canada Pension Plan maximum contributions have been increased
The Canada Pension Plan (CPP) and Québec Pension Plan (QPP) have been increased by 2.7%, the maximum pensionable earnings are $64,900, with a basic exemption of $3,500 for 2022. For CPP, the Employee and employer maximum contribution is $3,039.30; for QPP it is $3,315.60.

Québecers also have the option to increase their Québec Pension Plan premiums, by making extra contributions, to the enhanced plan. The enhancement of the QPP will provide future retirees with an increase in their pension premiums from 25% to 33.33%.

Note that any self-employed individuals must account for both the employer and the employee sides of the contribution. For 2022, their maximum contribution amount for the CPP is $6,078.60 and for the QPP it is $6,999.60.

8. RRSP dollar limit is increased
The RRSP annual dollar limit for tax year 2022 is $29,210. Remember that your RRSP contribution limit is capped at 18% of your earned income in the previous year. This means the dollar limit is the maximum amount you can contribute regardless of your income.

9. Changes to tax credits you need to know
Some credits have been added, changed, reinstated, or expanded for the 2022 tax year.

Below are some of the Federal changes to tax credits:

Air Quality Improvement Tax Credit: Eligible businesses including sole proprietorships, can claim 25% of their qualifying ventilation upgrades to a maximum of $10,000, creating a $2,500 tax credit.
Automobile Income Tax Deduction Limits: The changes include an Increase in Capital Cost Allowance (CCA) ceiling limits for zero emission and passenger vehicles, deductible monthly leasing costs also increased by $100, and the per kilometer rate paid by employers to employees who use their personal vehicle for work has increased by 2 cents per km from last year.
Home Accessibility Tax Credit (HATC): If you’re 65 or older, are eligible for the disability tax credit, and have remodeled your home for safer access, you can claim up to $20,000 of your related HATC expenses.
Labour Mobility Deduction (LMD): This new deduction allows tradespeople, apprentices, and employees working in construction to claim meals and lodging expenses paid to earn income at a temporary work location.

03/02/2023

Changes in 2022 Taxes you should be aware of.

1. Repaying COVID-19 benefits

If you received COVID-19 benefits from the CRA in 2022, such as the Canada Recovery Benefit (CRB), Canada Sickness Recovery Benefit (CSRB) or Canada Recovery Caregiving Benefit (CRCB) you will receive a T4A slip with the relevant information you need for your tax return.

If you received the CRB and your net income after certain adjustments is more than $38,000, then you may have to repay all or part of the benefits you received in 2022.

If you have repaid all or parts of COVID-19 benefits in 2022, you can choose which year to claim the tax deduction. You can either claim the deduction in the year you received the benefit, or the year you repaid it.

Plus, any one-time provincial payments to help you through COVID-19 will not be taxable, and you don’t need to report them as income on your 2022 tax return.

2. You can claim up to $500 for work-from-home expenses
Making a return from last year, you can once again claim the work-from-home tax credit. If you’ve been keeping track of your expenses, you can go ahead and claim your calculated total. Otherwise, you can use the flat rate method of $2 for each day worked from home during the pandemic.

3. The Basic Personal Amount (BPA) has been increased
As part of their policy to continue increasing it over time until it reaches $15,000 in 2023, the government increased the Basic Personal Amount for the 2022 tax year to $14,398. This means that every Canadian will get a slight boost to their return this year, and it’s likely you can expect another increase next year as well.

4. Tax brackets have shifted to account for inflation
The government has adjusted tax brackets for 2022 to maintain buying power for Canadians as prices of goods continue to slowly increase.

The new federal tax brackets for 2022 are as follows:

$0 to $50,197 of income (15%)
More than $50,197 to $100,392 (20.5%)
More than $100,392 to $155,625 (26%)
More than $155,625 to $221,708 (29%)
$221,708.01 and higher (33%)
The adjustment upwards means that Canadians on the edge of a tax bracket might find themselves shifted into a lower bracket this year and pay less taxes because of it.

5. The TFSA limit has been increased
The TFSA contribution limit has increased to $6,500 for the year. This means that if you’ve had an account since 2009, were 18 years of age and have been a resident of Canada throughout that period, the cumulative total you can have in your TFSA is now $81,500.

6. New OAS limit amounts
The OAS is designed to provide retirees with a source of income to support their retirement. However, if your income is over certain limit amounts, you might find your OAS amount reduced, and even canceled entirely.

For the 2022 tax year, if your taxable income was over $81,761, you would need to repay some of your OAS. Similarly, if your taxable income was over $134,626, you would not have received any OAS payments. Thanks to the CRA’s new Affordability Plan, seniors aged 75 and over received an automatic 10% increase of their Old Age Security pension, as of July 2022.

7. Canada Pension Plan maximum contributions have been increased
The Canada Pension Plan (CPP) and Québec Pension Plan (QPP) have been increased by 2.7%, the maximum pensionable earnings are $64,900, with a basic exemption of $3,500 for 2022. For CPP, the Employee and employer maximum contribution is $3,039.30; for QPP it is $3,315.60.

Québecers also have the option to increase their Québec Pension Plan premiums, by making extra contributions, to the enhanced plan. The enhancement of the QPP will provide future retirees with an increase in their pension premiums from 25% to 33.33%.

Note that any self-employed individuals must account for both the employer and the employee sides of the contribution. For 2022, their maximum contribution amount for the CPP is $6,078.60 and for the QPP it is $6,999.60.

8. RRSP dollar limit is increased
The RRSP annual dollar limit for tax year 2022 is $29,210. Remember that your RRSP contribution limit is capped at 18% of your earned income in the previous year. This means the dollar limit is the maximum amount you can contribute regardless of your income.

9. Changes to tax credits you need to know
Some credits have been added, changed, reinstated, or expanded for the 2022 tax year.

Below are some of the Federal changes to tax credits:

Air Quality Improvement Tax Credit: Eligible businesses including sole proprietorships, can claim 25% of their qualifying ventilation upgrades to a maximum of $10,000, creating a $2,500 tax credit.
Automobile Income Tax Deduction Limits: The changes include an Increase in Capital Cost Allowance (CCA) ceiling limits for zero emission and passenger vehicles, deductible monthly leasing costs also increased by $100, and the per kilometer rate paid by employers to employees who use their personal vehicle for work has increased by 2 cents per km from last year.
Home Accessibility Tax Credit (HATC): If you’re 65 or older, are eligible for the disability tax credit, and have remodeled your home for safer access, you can claim up to $20,000 of your related HATC expenses.
Labour Mobility Deduction (LMD): This new deduction allows tradespeople, apprentices, and employees working in construction to claim meals and lodging expenses paid to earn income at a temporary work location.

Send a message to learn more

01/08/2023

With big companies in control of the market, consumers are left with less choice and experts can’t agree on the way forward