Overview

Filing a Canadian tax return gets more complex when you have multiple income sources. Employment, freelance contracts, gig work, and rental revenue each come with different rules, forms, and potential deductions that can affect how much you owe or get back.

Accountants-BC Ltd. outlines what you need to know in this quick breakdown for multi-income earners, including CRA reporting requirements, common filing mistakes, and practical tips for organizing.

Highlights

Introduction

Multiple income streams can unlock new financial opportunities, but they also introduce layers of confusion come tax time. What you don’t know can often result in costly oversights.

Understanding how income types interact, which deductions apply, and where small errors can trigger bigger problems is essential. The small details here absolutely matter, and so does getting ahead of them before filing. To start untangling the process, it helps to know exactly what the CRA counts as income.

What Types of Income Do You Need To Report?

You might assume certain income sources like side gigs, hobby sales, or digital platform payouts will fly under the CRA’s radar. However, many types of earnings that feel informal or irregular are still considered taxable and must be reported, even if you didn’t receive a T-slip.

The most straightforward income source to report is employment. If you work for a company as an employee, your earnings are documented on a T4 slip, which outlines your total income and the taxes already withheld. This forms the foundation of most personal tax returns.

Here are the other forms that need to be reported:

  • Self-employment: Income earned from freelancing, consulting, or running a business, typically reported using a T2125 form.
  • Gig work: Earnings from platforms like Uber, DoorDash, or Etsy, often untracked by slips and fully your responsibility to report.
  • Rental income: Money earned from leasing out property, reported using the T776 form, with expenses deducted where eligible.
  • Investment income: Includes dividends, interest, and capital gains, usually reported on T5 or T3 slips.
  • Pension and retirement income: CPP, OAS, RRIF withdrawals, and private pensions all count as taxable income.
  • Social benefits and assistance: Some government payments, such as EI or COVID relief programs, are taxable and must be declared.

Tax Filing for Gigs vs Freelance Income

In Canada, both gig workers and freelancers are considered self-employed and file using Form T2125, the Statement of Business or Professional Activities. This form lets you report your income, list business expenses, and calculate your net earnings, which are then entered on Line 26000 of your T1 return.

The main filing difference comes down to how the income is tracked. Gig platforms often provide annual summaries but don’t issue T4A slips. Freelancers may invoice clients directly and receive T4As if they earn over $500 from a single payer, which must also be included in their total income.

Beyond filing, freelancers often have more control over rates, contracts, and client relationships, while gig workers operate within platform rules. These differences can also affect the types of deductions claimed, GST/HST obligations, and how income is documented year-round.

What Is Line 13000 on a Tax Return?

Line 13000 on your Canadian tax return is used to report other income that doesn’t fall under regular employment or self-employment categories. It’s a catch-all line for taxable amounts that aren’t reported elsewhere on your return.

Common examples of income reported on Line 13000 include scholarships, bursaries, research grants, taxable disability payments, and certain retroactive lump-sum payments. It can also include income from hobbies if it’s not considered a business.

For example, if you received a $2,000 scholarship that exceeds the non-taxable threshold, that taxable portion would be entered on Line 13000. This line doesn’t involve deductions, just the full amount of the income type that applies. On the space to the left of the line, report the type of income. If you have more than one type, you need to list each one separately on a statement attached to your return, with a breakdown of the amounts.

Claiming Tax Deductions With Multiple Income Streams

When you earn income from multiple sources, you can claim deductions related to your self-employed or business activities. These deductions reduce your net income, lowering the amount of tax you owe.

Common deductible expenses include home office costs, internet, phone usage, software, supplies, vehicle expenses, and professional fees, as long as they directly relate to the income you earned. Each income stream should have its own supporting records.

A good example would be if you work full-time and run a photography business on weekends. In this case, you can deduct the cost of editing software, marketing, and a portion of your home office, but only against the photography income, not your employment earnings.

Do Multiple Incomes Affect Your Tax Bracket?

Your tax bracket is the range of income that determines the rate of tax you pay. In Canada, the more you earn, the higher the percentage you pay on the next portion of your income, not on all of it.

If you have multiple sources of income, they’re combined to calculate your total taxable income. This could push you into a higher tax bracket, meaning a portion of your income will be taxed at a higher rate than it would be with one income stream.

So, let’s say your job pays $45,000 and your side business earns $20,000. In this case, the combined $65,000 may move some of your income into a higher bracket. That doesn’t change the rate on your entire income, just on the portion above each threshold.

How To Track Income and Expenses Properly

Accurate income tracking ensures you report the full amount you’ve earned from all sources, which the CRA requires, even if no tax slips are issued. Missing income will lead to reassessments and penalties.

Keeping detailed expense records is just as important. If you’re claiming deductions, you need clear documentation to support each one in case of a review. Good records also help you avoid overclaiming or missing legitimate write-offs.

Here are a few key tracking tips for income:

  • Keep a separate folder (digital or physical) for each income source.
  • Save all invoices, gig summaries, and bank deposit records.
  • Download annual statements from platforms like Uber, Etsy, or PayPal.
  • Track any cash payments and log them immediately.
  • Reconcile income totals monthly to avoid missing anything.

And for expenses:

  • Save all receipts related to self-employed or business activities.
  • Use a spreadsheet or bookkeeping app to categorize expenses.
  • Record the purpose of each expense for CRA audit readiness.
  • Track mileage separately with date, distance, and reason.
  • Keep business and personal expenses clearly separated.

Common Filing Mistakes With Mixed Income

As you can see, tax filing becomes more complex when you have more than one income stream. Small errors can happen, but unfortunately, even honest mistakes can lead to penalties.

Here are some common mistakes and how to avoid them:

Forgetting To Report Income Without a T4 or T4A Slip

When you earn money outside of traditional employment, you might assume that if there’s no slip, it doesn’t need to be reported. However, the CRA still considers it taxable income.

To avoid this mistake, just keep your own records of all payments received, whether through e-transfer, cash, or online platforms. If the income isn’t reported by someone else, it’s still your responsibility.

Combining Business and Personal Expenses in One Total

Mixing personal and business expenses is a common filing mistake, especially for self-employed individuals. The CRA only allows deductions for expenses directly related to earning business income, and combining totals without separation can lead to denied claims or audits.

The best way to avoid this issue is to keep clear records and separate receipts for business-related costs. You can even use a spreadsheet or a bookkeeping tool to log only the portion used for business.

Missing GST/HST Obligations for Side Business Income

If your total self-employment or business income exceeds $30,000 in a 12-month period, the CRA requires you to register for a GST/HST number. Many side business owners miss this threshold and unknowingly fail to charge or remit sales tax.

To stay compliant, monitor your gross income from all sources regularly. If you’re approaching the limit, register with the CRA and begin charging GST/HST as required. Failing to do so can result in interest, penalties, and backdated tax amounts owed.

Claiming the Same Tax Deduction Twice Across Income Sources

Some deductions apply to more than one type of work, but that doesn’t mean you can claim them more than once. The CRA requires each expense to be clearly tied to a specific income source.

Always divide shared costs proportionally and document how you split them. Only claim your share under each activity, and avoid entering the full amount in more than one place.

Hire a Tax Professional To Simplify Your Multi-Income Tax Return

Even with a clearer understanding of how to handle mixed income, filing a tax return with multiple sources can still be time-consuming and easy to miscalculate. A tax professional from Accountants-BC Ltd. can make sure everything is filed accurately, deductions are properly claimed, and nothing gets overlooked.

Call (604) 683-2341 today to get your questions answered and your return handled properly.