How to pay income tax from digital platforms in Canada

“Especially in the first year … make sure that if you don't know how to report self-employment income, seek help and get it right, rather than risking getting it wrong. It's going to take a very long time and it's going to be very expensive to get it right,” said Bruce Goudy, director of indirect tax practice for BDO Canada.

Many Canadians earn income through websites and apps, whether they're renting out a place on Airbnb, delivering food through Uber Eats, or creating graphics on Fiverr.

In December 2023, 927,000 people aged 15 to 69 years said they received money through a digital program in the previous year, Statistics Canada said. This included platforms that pay workers directly and those that connect workers with customers.

If you earn money through a digital platform, you're considered self-employed, says Stefanie Ricchio, a chartered accountant and spokeswoman for TurboTax Canada.

How to report self-employment income

Instead of the standard T4 tax form you get from an employer, you'll need to report your self-employment income on form T2125 when you file your taxes.

Along with your income, you also need to report your expenses, says Ricchio. These expenses can include home office expenses, car maintenance, and even digital payments—there are hundreds of deductions available, he said.

“The more eligible deductions you take on that income, the lower your tax bill will be if you file.”

Because you typically don't collect taxes when you earn money through digital platforms, you need to be prepared to pay those taxes when you file, Ricchio said. He recommends setting aside about a quarter of your salary for this purpose.