Tax Tips Canadian Freelancers Should Know


The lifestyle of a freelancer has a number of great advantages. You will be able to make your own hours, take time off when you need and work from your comfortable home- rather than sitting in a cubicle. You have the freedom to take on any projects that interest you, building your career in an exciting and interesting way.


Freelancing is a very exciting career opportunity – however one of the disadvantages is that when it comes to filing your taxes things can get complicated. You won’t have a corporate payroll department deducting your income tax and getting a tax refund can be tricky. Filing your own taxes as a freelancer can be confusing and there are a lot of little details that you will need to cover.

How can you make the process of filing your tax return easier? Here are some tips that will take the stress out of the process and make things simpler, so that you will have more time to focus on building your freelance business.

Tax Tips for Freelancers

  • Always keep track of all of your receipts and invoices, no matter how insignificant or small you think it might be. You can create a folder on your computer to store them in, or print off online receipts and store them in a file folder.
  • The reason why you should keep track of all your receipts is because you can claim on a huge range of things including travel expenses, furniture, postage and much more. You can see a full list of what can be deducted at the Canada Revenue Agency.
  • When you are tracking your expenses, don’t just throw everything in a miscellaneous “expenses!” column. You should differentiate as to what each expense is, such as postage, a cell phone or your office space.
  • Did you know that if you have an automobile and you are self-employed, you can claim the cost of registration, oil changes, repairs and gas? However, in order to do this you must keep a log of the kilometres that you travel for business related reasons on a daily basis.
  • You should also keep track of all your invoices. Even if you only bill for a small amount, you should still keep a record of the invoice.
  • Try to establish a logical and well organised system for storing your receipts. This will mean that when you need to access them later, they will be easy for you to find.
  • Save money for your tax return. When you are a freelancer, you won’t have your taxes taken from your paycheque every month – they will be deducted at the end of the year. This can sometimes be a shock if you haven’t been preparing and you might scramble to come up with the money.
  • A general rule of thumb is to save 30% of your income for your taxes. You might pay more or less than this, but you can adjust it to suit.
  • Freelancers are usually able to write off the cost of the equipment that they purchase for business reasons, such as a computer, office furniture or a photo-copier. However, you might not be able to write off the full value of a piece of equipment in one year. For example, a computer could be written off over two years, furniture over five, etc.
  • When making claims for dining and entertainment expenses – think about whether it makes sense for your industry. A lawyer or a real estate salesperson often must entertain clients in order to drum up business, but if a doctor claimed the same expenses it would be suspicious.

One of the most helpful tools for figuring out the complex world of freelancer taxes can be tax software. These programs, such as TurboTax and H&R Block, will help you to get your freelance taxes organised and make filing so much easier. You can purchase them online and even save money on the software with online tax coupons.

These are just a few helpful tips that you should keep in mind when filing your taxes as a freelancer in Canada, so that the process will be simple, easy and accurate.

About the author

Russell Matthews is an expert on tax and saving money. He also writes for SumoCoupon

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