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When are Self-Employed Taxes Due?

With 2020 nearing its end, now is the time to get a head-start on your tax returns for this past fiscal year. If you are a self-employed person living in Canada, you will need to know the associated due dates for your income tax returns as governed by the Canada Revenue Agency (CRA).

Learn more about the Canadian self-employed tax return due dates below. 

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Who Needs to File Self-Employed Taxes?

Self-employment means working for yourself. If you are a small business owner, you run your own business. But if you are self-employed, that means you are the business.

Typically, self-employed individuals are often:

  • Independent contractors
  • Freelancers
  • Consultants

As a self-employed person, your tax forms and filing dates will differ from an employee of a business or a business owner. If this confuses you, you can learn more about the self-employed tax forms that apply to your income return.

Personal Income Tax Returns

As a self-employed individual who earns money from your professional activities, you will need to file your business and financial information together on your personal income tax return.

Self-employment is a one-person business, or possibly more if you have employees working under you. In any case, your work is your business, meaning you run a business. In doing so, you will have had to choose between structuring your business as a sole proprietorship, partnership, or corporation.

Self-employed businesses run as sole proprietorships and partnerships will file their business information and employment income on their personal income tax return. To do this, you will need to fill in form T2125, Statement of Business Activities. This completed document informs the CRA of your self-employment income information, where you will also be able to claim back deductions.

The T2125, alongside your other financial documents, will make up the T1 General return, which must be submitted to the CRA before the appropriate filing due date. If you are part of a partnership, further forms are required as part of the return, namely the T5013 Partnership Information Return.

If your self-employed business is incorporated, then your tax return filing process and deadlines will differ.

Find out more information on small business tax deadlines and how your business structure will dictate your tax deadlines.

Self-Employed Tax Deadline

Your self-employed income tax returns must be completed and submitted to the CRA before the appropriate filing due date. Once submitted, you will also need to ensure that your tax payments are made before the appropriate due dates. But what is the tax deadline for self-employed persons?

This chart illustrates the return and payment due dates based on what type of filer you are.

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Is the CRA Extending the Tax Return Due Dates?

The CRA extended the 2019 tax return deadlines due to the COVID pandemic to help Canadians during this difficult time. As a result, there could be further extensions in the future when filing your 2020 tax returns. Hence, it is crucial to keep an eye on CRA announcements and protocol to determine if any vital due dates will change over the next year.

Do Self-Employed Individuals Use a Fiscal Year or Calendar Year?

Typically, those self-employed in Canada will use a calendar year as their fiscal year. This means that the end date of the tax year would fall on December 31. It’s essential that you familiarize yourself with the CRA’s rules and regulations regarding fiscal periods to determine if the end of your tax year is December 31.

For more information, the CRA has provided a guide on the T4002 form, Self-employed Business, Professional, Commission, Farming, and Fishing Income.

Is There a Penalty for Filing Taxes Late?

Yes, if you miss the self-employed tax deadline and there is a balance owing, then the CRA can legally fine or charge you with a late filing penalty. Typically, the CRA will penalize late filing with a 5% interest charge of any balance owing, plus 1% interest of the owed balance every full month the return is late, up to a total of 12 months.

Always give yourself some extra time to ensure your returns are completed and filed before the due date. This guarantees that the CRA won’t be taking any action against you. Don’t think you meet your deadlines on time this year? Consider using these time management tools and apps to help you manage your time and workload before it’s too late.

Self-Employed Accounting Software Can Help

It’s always best to prepare for tax season ahead of time to ensure you meet all your self-employed taxes Canada due date requirements so you won’t get hit with a late filing penalty. Millions of people across Canada have turned to QuickBooks Self-Employed to help them track expenses and financial information throughout the tax year to prepare for their filing and payment dates.

If you require a helping hand with your accounting responsibilities, why not try QuickBooks free today! 

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