Guides a self-employed Canadian individual through the full annual engagement: business income and expense capture on Form T2125, GST/HST filing obligations, CPP contributions on self-employment (Schedule 8), RRSP deduction, and submission of the T1 General by the June 15 extended deadline, with balance-due reminders for April 30.
Confirm the client was a Canadian tax resident for the full year (or determine part-year dates), identify province of residence on December 31 (which drives provincial surtax and credits), and flag any immigration/emigration or foreign-income issues that would change the filing profile.
Gather all self-employment revenue and deductible business expenses to complete Form T2125 (Statement of Business or Professional Activities). Determine the correct industry code, confirm the fiscal year (calendar year for most sole proprietors), apply CCA (capital cost allowance) on business assets using the correct CCA class rates, and calculate net business income.
Determine whether the client is required (or voluntarily registered) to collect and remit GST/HST, confirm the reporting period (annual, quarterly, or monthly), and prepare the GST/HST return. The mandatory registration threshold is $30,000 CAD in taxable supplies in a single calendar quarter or over four consecutive quarters; small suppliers below this threshold may still register voluntarily to claim input tax credits (ITCs).
Calculate Canada Pension Plan contributions owed on net self-employment income using Schedule 8. Self-employed individuals pay both the employee (5.95%) and employer (5.95%) shares on earnings between the basic exemption ($3,500) and the Year's Maximum Pensionable Earnings ($68,500 for 2025), for a combined maximum CPP1 contribution of approximately $7,735. Also assess CPP2 (enhanced second contribution, 4% rate on earnings between YMPE and the Year's Additional Maximum Pensionable Earnings).
Identify all above-the-line deductions (RRSP contributions, union/professional dues, moving expenses, child-care expenses, business-use-of-home carryforward) and personal tax credits (basic personal, spousal, eligible dependant, disability, tuition, medical expenses, charitable donations) that reduce the client's federal and provincial tax. Confirm RRSP contribution room from the prior year's NOA and the deadline of March 1, 2026 for 2025 deductions.
Assemble the complete T1 General return: carry net business income from T2125 to line 13500/13700, apply all deductions and credits, compute net income (line 23600), taxable income (line 26000), and federal/provincial tax. Confirm the filing deadline (June 15, 2026 for self-employed clients, but balance owing is still due April 30, 2026) and review whether CRA will require instalment payments in 2026 based on 2025 net tax.
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ALWAYS USE THIS SKILL when a user asks for help preparing their Canadian tax returns AND m
nu-individual-return
Use this skill whenever asked about Nunavut territorial income tax for a self-employed sol
ca-fed-instalments
Use this skill whenever asked about Canadian federal quarterly instalment requirements for
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Canada capital gains tax: inclusion rate (50% / 2/3 above $250k from 2024), lifetime capit
ca-fed-t1-return
Use this skill whenever asked about a Canadian federal T1 General individual income tax re
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Use this skill whenever asked about Nova Scotia provincial individual income tax. Trigger
ca-fed-t2125
Use this skill whenever asked about Canadian self-employment business income reported on F
nl-individual-return
Use this skill whenever asked about Newfoundland and Labrador provincial individual income
qc-individual-return
Use this skill whenever asked about Quebec provincial income tax (TP-1) for a self-employe
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Use this skill whenever asked about Northwest Territories territorial income tax for a sel
canada-tax-optimization
Use this skill when advising on LEGAL tax minimization strategies for Canadian taxpayers —
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Use this skill whenever asked about Ontario provincial income tax for a self-employed sole