Updated Checked by the Tax-Services.ca editorial team How we check
Side-gig money is taxable business income when you run the activity in a commercial way. A true hobby is neither taxed nor deductible. Net $8,000 on top of a $60,000 Ontario salary costs about $2,772 in extra income tax and CPP for the 2026 tax year (an estimate), so which label you land on matters.
What does $8,000 of side income cost an employee earning $60,000 in Ontario?
About $2,772 for the 2026 tax year, which leaves roughly $5,228 in your pocket. The estimate assumes an Ontario resident with $60,000 of salary, $8,000 of net side income after expenses, basic credits, and CPP and EI on the job. The lines are rounded separately, so they can be a dollar apart.
| Item | Amount |
|---|---|
| Net side income | $8,000 |
| Extra federal and Ontario income tax | $2,237 |
| Extra CPP on the side income | $536 |
| Total added | $2,772 |
| Left for you | $5,228 |
The side income stacks on top of your salary, so it’s taxed at your top rates. An employee at this income pays about 29.65% on the next dollar of ordinary income, which means each extra $1,000 of valid expenses trims roughly $297 of income tax. The side hustle tax calculator runs the same kind of estimate on your own numbers.
How does the CRA decide whether my side income is a hobby or a business?
It asks two questions taken from the Supreme Court’s 2002 Stewart decision. First, do you do the activity at least partly for personal satisfaction? If not, it’s a source of income and the ordinary business rules apply. If you do, the second question decides it: are you running the activity in a sufficiently commercial way, with a reasonable expectation of profit? The CRA sets this out in the pursuit of profit section of its Canada Revenue Agency: Income Tax Audit Manual, chapter 27. A yes to the second question makes it a business, even if you also enjoy the work.
Which facts tip a side gig toward business?
No single fact settles it, and the weight of each depends on your situation. The audit manual points auditors at things like these:
- Your customers. Strangers who find you online look commercial. A list made up of relatives and neighbours looks personal.
- Your prices. Fair market prices look commercial, and selling below cost to friends doesn’t.
- Whether you plan, advertise and try to grow, or only work on it when the mood hits.
- Training, experience, and the money you’ve put in, including borrowed money.
- The pattern of your losses. A rough first year after buying equipment is normal. Ten years of losses with no change in how you operate is hard to defend.
- How you run it: a separate bank account, invoices, a proper ledger.
Courts have also said that running an activity from your own home can bring in a personal element, so for home-based work the commercial facts carry extra weight.
What happens if the CRA treats it as a hobby?
Hobby money is left out of income, and hobby costs can’t be deducted. Canada Revenue Agency: Income Tax Folio S3-F9-C1 says a hobby’s receipts and expenses are excluded from income, and any excess of expenses over receipts is a personal expense. So $1,500 of craft-fair sales goes untaxed, and the $3,000 you spent on supplies and a booth gives you no loss to claim against your pay cheque. Calling something a hobby after the fact rarely works once a platform has already sent the CRA your totals.
How do I report side income and claim expenses?
Fill in Form T2125, Statement of Business or Professional Activities, for each business and carry the net income to your T1 return. List gross sales first, then the business part of each expense, and leave personal costs out. The Canada Revenue Agency: Business and Professional Income guide, chapter 2 defines a business as an activity you intend to carry on for profit, with evidence to back that intention.
Net income also brings CPP. A self-employed person pays both halves, 11.9% on net earnings above $3,500 for 2026, and gets a deduction and a credit for parts of it. File by 15 June 2027, but any balance is still due 30 April 2027. Our self-employed expenses checklist and the page on self-employed tax deductions cover what you can claim.
When do I have to charge GST/HST on side income?
Once your taxable revenue passes $30,000 in a single calendar quarter or across four consecutive quarters. The Canada Revenue Agency: When to register for and start charging the GST/HST page explains that this small supplier limit counts revenue from all your businesses and those of associated persons. Below it you don’t have to charge GST/HST, though you can register voluntarily to claim input tax credits. Ride-sharing drivers must register from their first fare. For the mechanics, see our piece on GST for small business.
Will Etsy, Airbnb or Uber tell the CRA what I earned?
Yes. Under the Canada Revenue Agency: Reporting Rules for Digital Platform Operators, platforms report their sellers’ identification details and the amounts paid to them, starting with 2024, and they must give you a copy by 31 January each year. Sellers with fewer than 30 sales of goods and $2,800 or less in payments for the period are excluded from the report. That only changes what the platform sends. What you owe stays the same. If you don’t give a platform your tax identification number, the CRA can assess a $500 penalty for each failure. If you missed earlier years, our guide for people who haven’t filed in years shows the usual ways to fix it.
Where does this information come from?
The hobby-or-business test comes from the CRA Income Tax Audit Manual and Income Tax Folio S3-F9-C1, the GST/HST small supplier limit and platform reporting rules from canada.ca, and the dollar example from our own engine, an estimate with basic credits and CPP and EI only. Checked in October 2026. This is an independent information site: we provide no services, we do not represent the CRA or any organization, and we do not guarantee that anything here is accurate or current. We accept no liability for decisions based on it. Check the official source before you rely on it. See the full disclaimer.
Frequently asked questions
Can I deduct a loss from my side business against my salary?
If the activity is a business, a net loss reduces your other income on the return. If the CRA decides it's a hobby, the loss is a personal expense and nothing is deductible. Keep invoices and a simple ledger so you can show a commercial approach.
Is there a minimum amount of side income I can leave off my return?
No. Business income is taxable from the first dollar, so even $400 of sales belongs on Form T2125. The platform exclusion for fewer than 30 sales and $2,800 or less only limits what the platform reports to the CRA.
When is the deadline to report side income earned in 2026?
You file by 15 June 2027, because business income gives you the self-employed deadline. Any tax owing is still due 30 April 2027, and interest starts the next day, so pay by April even if you file in June.
I never reported side income in earlier years. What can I do?
The CRA says you can amend the income tax return, adjust your GST/HST return, or apply to the Voluntary Disclosures Program. Doing it before the CRA contacts you generally leaves you in a better position than waiting for a review.