Everything You Need to Know About Taxes as a Freelancer in Canada in 2022
May 9, 2022 | Written by: Sohail Afzal
As a freelancer in Canada, staying up-to-date on the latest tax laws is important. In 2022, there are several new changes that you need to be aware of. The accounting and tax firm GTA Accounting has put together a guide to help freelancers understand how the new tax laws will affect them. In this article, we will highlight some of the most important changes for Canadian freelancers in 2022.
What Tax Bracket Do Freelancers Fall Under?
In Canada, freelancers are considered to be self-employed. This means that you will need to file your taxes as a business owner. The tax bracket for business owners is different from the tax bracket for employees. As a result, you may end up paying more taxes as a freelancer than you would if you were employed by someone else.
How Much Taxes Do a Freelancer Have to Pay?
The amount of taxes that freelancers have to pay depends on their income. If you make more money, you will be in a higher tax bracket and owe more taxes. The good news is that as a freelancer, you can deduct certain expenses from your income before calculating your taxes owing. This includes things like office supplies, accounting fees, and travel expenses.
What Are the New Tax Laws for Freelancers in 2022?
Several new tax laws will affect freelancers in Canada in 2022. The most significant change is the introduction of the carbon tax. This tax will be applied to all businesses, including freelancers. The amount of the tax will depend on your province of residence. For example, in Ontario, the carbon tax is $30 per tonne of greenhouse gas emissions. This means that if you live in Ontario and your business emits 100 tonnes of greenhouse gases, you would owe $3000 in carbon taxes. Another change that will affect freelancers is the increase in the minimum wage. In 2022, the minimum wage in Canada will be $15 per hour. This means that if you are paid by the hour, you will need to charge your clients at least $15 per hour to make a profit.
What are the Changes in Tax Law that a Freelancer Should Know About?
One of the most significant changes for Canadian freelancers is the new tax rate on income earned from freelance work. The tax rate will now be 15%, which is a decrease from the previous tax rate of 20%. This change will take effect in January.
Another important change for freelancers is the way in which expenses are deducted. Previously, expenses could only be deducted if they were incurred directly due to freelance work. However, starting in 2022, any expenses considered “necessary and ordinary” can be deducted. This includes costs such as office supplies, computer equipment, and software.
Finally, it is important to note that the deadline for filing taxes has been moved up to May 15th. This means that freelancers will need to complete their tax returns and make any payments by this date.
By understanding these changes, Canadian freelancers can be sure that they are compliant with the new tax laws in 2022. If you have any questions about how these changes will affect your specific situation, we recommend speaking to an accountant or tax specialist. GTA Accounting Canada has a team of accounting and tax experts who can help you understand the new tax laws and ensure that you are compliant. Visit our website or give us a call today to learn more about our services.
Sohail Afzal, CPA, CMA, MBA
Sohail Afzal, (CPA, CMA, MBA) is the founder & CEO of GTA Accounting Professional Corporation. He is a highly experienced Chartered Professional Accountant and businessman himself and understands the challenges that many businesses face when it comes to cash flow management. As an experienced business consultant & tax advisor, he is helping companies grow by providing the technical, financial, and contractual information necessary for strategic decision-making.