"How much can I earn before I pay tax?" is one of the most common questions new business owners ask. There isn't one magic number. Several thresholds apply, and they measure different things.
First: all business income has to be reported
There's no minimum amount of business income that you can leave off your return. The CRA's position is that Canadian residents report their worldwide income from all sources. That includes income from freelancing, gig work, social media and online marketplaces. Tips and gifts received through online platforms are generally taxable too.
Sole proprietors use Form T2125 with their personal return; corporations use the T2.
Reporting income and owing tax on it are two different things, though. That's where the thresholds below come in.
The basic personal amount: when income tax starts to bite
Every individual can claim the basic personal amount, a non-refundable tax credit. For 2026, the maximum federal basic personal amount is $16,452 for individuals whose net income is at or below $181,440. (It's gradually reduced above that level.) Ontario has its own separate basic personal amount on the provincial return.
So a sole proprietor with modest net income may owe little or no income tax, but still has to file, and CPP is separate.
CPP: the threshold is much lower
If you're self-employed outside Quebec, you contribute to the Canada Pension Plan on your net business income (after expenses) above a $3,500 basic exemption.
For 2026:
The self-employed contribution rate is 11.9% on earnings between $3,500 and $74,600, because you pay both the employee and employer shares. The maximum is $8,460.90.
A second additional contribution of 8% applies to earnings between $74,600 and $85,000, up to $832.
The CRA also lists having to contribute to CPP, because your net self-employment income plus pensionable employment income is more than $3,500, as a reason you must file a return. So even a small side business can trigger a filing requirement.
The $30,000 small supplier threshold for GST/HST
This is the number most people mean when they mention "$30,000," and it's about sales tax, not income tax.
You're a small supplier if your worldwide taxable supplies (revenue before expenses, including those of associates) don't exceed $30,000 over four consecutive calendar quarters. Small suppliers don't have to register for GST/HST, but they can choose to register voluntarily.
How you lose small supplier status matters:
Over $30,000 in a single calendar quarter: you stop being a small supplier immediately. You must charge GST/HST on the very sale that pushed you over and register within 29 days.
Over $30,000 across the last four (or fewer) quarters, but not in a single one: you stop being a small supplier at the end of the month after the quarter in which you crossed the line. You start charging GST/HST from your first sale after that.
In Ontario, the HST rate is 13%. A few businesses, such as commercial ride-sharing and taxi drivers, must register from their first dollar regardless of the threshold.
Registering voluntarily lets you claim input tax credits on GST/HST paid on business expenses, but it also adds filing obligations.
The $500,000 small business limit (for corporations)
If you've incorporated, you may have heard of the "$500,000 limit." This is the business limit for the small business deduction, which lowers the tax rate on active business income for Canadian-controlled private corporations (CCPCs).
In simple terms:
An eligible CCPC pays a reduced federal rate of 9% on up to $500,000 of active business income. Income above that is taxed at the higher general rate.
Ontario uses the same $500,000 limit for its lower provincial rate.
Associated corporations share one $500,000 limit.
The limit can shrink if the corporation (and its associated group) has more than $10 million of taxable capital, or earns more than $50,000 of passive investment income.
It's a limit on how much income gets the lower rate. It's not a tax-free amount.
Why clean books make these thresholds manageable
Every threshold above depends on accurate numbers. If your records are months behind, you can cross a line without noticing. Our post comparing an Excel bookkeeping template vs QuickBooks can help you choose a system that keeps up, and our bookkeeping services can keep it current for you.
Frequently asked questions
How much can a small business earn before paying taxes?
There's no minimum for reporting. All business income goes on your return. Whether you owe income tax depends on your total income and credits, such as the basic personal amount. CPP contributions apply on net self-employment income above $3,500.
Do I have to pay HST if I make less than $30,000?
Generally not, if your taxable sales stay at or below $30,000 over four consecutive calendar quarters and you haven't registered voluntarily. Some businesses, like ride-sharing, must register regardless.
Do you have to claim business income under $30,000?
Yes. The $30,000 figure is a GST/HST registration threshold. It doesn't exempt income from income tax reporting.
What is the $500,000 small business limit?
It's the amount of active business income on which an eligible CCPC can claim the small business deduction and pay a lower rate. Associated corporations share it.
Know where you stand before you cross a threshold
Oakridge Business Services helps Ontario small businesses keep accurate, up-to-date books, so you can see your sales and income at a glance and plan ahead. Book a free consultation to talk through your setup.
This article is general information, not tax advice for your situation.
