Side hustles are more popular than ever in Canada. Whether you’re freelancing, selling products online, driving for a ride-share company, or earning money from social media, one question comes up again and again: do side hustles get taxed in Canada?
The short answer is yes. In most cases, you do have to pay taxes on side hustles. This guide explains how side hustle taxes in Canada work, how much tax you may owe, and what you need to do to stay compliant with the CRA.
Do Side Hustles Get Taxed in Canada?
Yes. Side hustle income is taxable in Canada, even if it’s earned part-time or outside your main job.
The CRA considers most side hustles to be business income, which means:
- You must report the income on your tax return
- You may need to pay income tax
- You may also owe CPP contributions
- GST/HST may apply depending on revenue
So, if you’re wondering “are side hustles taxed?”, the answer is clearly yes.
Do You Have to Pay Taxes on Side Hustles If It’s Just Extra Income?
Many people assume that small or occasional earnings don’t count. However, there is no minimum income threshold that makes side hustle income tax-free.
You must report your side hustle income if you:
- Earn cash or e-transfers
- Receive online payments (PayPal, Stripe, etc.)
- Get paid in goods or services
- Earn income irregularly
Even if your side hustle earns only a few thousand dollars, you still have to pay tax on side hustle income.
How Are Side Hustles Taxed in Canada?
1. Income Tax on Side Hustle Earnings
Side hustle income is added to your total annual income and taxed at your personal marginal tax rate.
This means:
- The more you earn overall, the higher your tax rate
- Side hustle income may push you into a higher tax bracket
This is why understanding income tax on side hustle earnings is critical for budgeting.
2. CPP Contributions
If your side hustle is self-employment income, you must pay both the employee and employer portion of CPP.
This is often overlooked and can significantly increase your tax bill.
3. GST/HST (If Applicable)
If your side hustle earns more than $30,000 in 12 months, you must:
- Register for GST/HST
- Charge tax to clients
- File regular GST/HST returns
This applies even if your side hustle is not your full-time job.
How Much Tax Do I Pay on My Side Hustle?
The amount of tax depends on:
- Your total annual income
- Your province
- Eligible business expenses
- Whether CPP applies
- GST/HST registration status
There is no flat rate, which is why many people ask “how much tax do I pay on my side hustle?” The answer varies from person to person.
A general estimate:
- 20%–30% for lower income earners
- 30%–45% for higher income earners
Setting aside money regularly is strongly recommended.
How Much Side Hustle Income Before Tax Applies?
A common myth is that small side hustles don’t count.
In reality:
- Every dollar is taxable
- There is no exemption amount
- Even part-time or occasional income must be reported
So if you’re asking “how much side hustle before tax?”, the answer is any amount.
Side Hustles and Taxes: Can You Deduct Expenses?
Yes. One advantage of reporting your side hustle properly is that you can deduct eligible business expenses, such as:
- Home office costs
- Internet and phone usage
- Advertising and marketing
- Software subscriptions
- Business supplies
- Vehicle expenses (if applicable)
This can significantly reduce your side hustle income tax.
Do You Need to Register Your Side Hustle as a Business?
If your side hustle is ongoing and profit-driven, business registration is often recommended.
Registering can:
- Make expense tracking easier
- Improve CRA compliance
- Support GST/HST registration
- Increase professional credibility
Many side hustlers choose to start with small business registration in Ontario to stay compliant from day one.
Paying Taxes on a Side Hustle: What Happens If You Don’t?
Failing to report side hustle income can lead to:
- CRA reassessments
- Interest and penalties
- Loss of expense deductions
- Increased audit risk
The CRA actively reviews online platforms, bank deposits, and payment processors, making unreported income easier to detect.
Do I Have to Pay Tax on Side Hustle Income If I’m Employed?
Yes. Even if you already have a full-time job:
- Side hustle income is still taxable
- It is added on top of your employment income
- It may increase your marginal tax rate
This is one of the most common reasons people underestimate their tax bill.
Final Thoughts: Side Hustle Taxes in Canada
If you’re earning extra income, side hustle taxes in Canada are unavoidable. The key is understanding your obligations early so you can:
- Avoid surprises at tax time
- Claim legitimate deductions
- Stay compliant with CRA rules
- Keep more of your hard-earned money
If your side hustle is growing or becoming consistent, professional tax guidance can help you manage paying taxes on side hustle income the smart way.