Taxes for Airworkers
First, a disclaimer: All notes shared in this blog post are just general suggestions for contract workers using Airwork.io to find contract work. They are thinking points and should NOT be taken as legal or financial advice. While our customer support team is always happy to help tackle technical and service related questions, for detailed tax matters, please seek consultation from a licensed tax lawyer or CPA before making any critical financial decisions.
Independent Contractor Taxes in Canada
As an Airworker you are working as what the Canada Revenue Agency, or CRA, calls a Self-Employed Individual, otherwise known as an independent contractor. As a result, income taxes, Canada Pension Plan (or CPP) contributions, Employment Insurance (or EI) contributions, and additional benefit contributions are not automatically deducted from your earnings. This means that you are responsible for managing your own tax obligations, filing your T1 income tax return form package, and paying your tax owings to the CRA on time. Failure to stay on top of this can lead to unforeseen penalties and interest accrual when tax season arrives. Read more about it on the CRA's official page for "Employee vs Self-Employed".
Do I need to register for an HST/GST number?
The first crucial step is to determine if you need to register for an HST/GST number. If your total contracting income (includes Airwork shifts and other contracting projects) exceeds $30,000 CAD per year, it is necessary to register for an HST/GST number. This ensures compliance with tax regulations and allows you to collect and remit the applicable taxes. Learn more about the specifics of whether or not you need an HST/GST number on this CRA page.
What are valid business expenses for contract jobs?
You can also minimize your taxes by keeping track of legitimate business expenses. Expenses such as equipment required for working in a warehouse, for example, safety boots, high visibility vests, hard hats, or certification courses purchased while working on the Airwork platform can be deducted from your total taxable income. This reduces your overall tax liability and helps maximize your take-home earnings. Learn more on this page from the CRA about what is and is not a valid business expense.
When do I pay taxes for contract work?
As a gig worker, you have the flexibility to choose between quarterly or annual tax payments. Whichever option you select, keeping accurate records is crucial. Online tools and resources such as this tax calculator by WealthSimple can help you estimate the taxes you may owe. This helps you to plan and save accordingly. It is wise to err on the side of caution and save more for taxes rather than less, ensuring you are adequately prepared to meet your tax obligations.
What forms do I need to file, and how?
You will need to complete and file a statement of business activities or a T2125 form. This form outlines your earnings and expenses incurred throughout the year. As Airworkers are self-employed individuals, you will not receive a T4 slip, the standard tax slip that full-time employees generally receive from their employers.
There are many ways to file your income taxes, but the best way is to file online using tax filing software such as TurboTax or the CRA’s EFILE service.
Conclusion: as a contract worker, you're responsible for your own tax obligations
To navigate the complexities of tax obligations as an independent contractor, it is best to seek advice from a tax professional. They can provide guidance on complying with applicable laws and regulations while helping you identify opportunities to increase your tax savings.
By proactively managing your tax obligations as an independent contractor for Airwork, you can limit unnecessary stress and avoid financial penalties. Remember: stay informed, stay organised, and prioritise compliance to ensure a trouble-free tax season.
Find gigs on Airwork
Now that you know how to file taxes for contract work done with Airwork, get started now with finding temp jobs in the Toronto area. Our Airwork app lets you book shifts at local companies conveniently located near you. You can pick the shifts that make sense with your schedule. Plus, instantly get a 10% pay raise and best yet, we offer same day payout.
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