Canada actively welcomes self-employed newcomers. The systems are accessible, the requirements are reasonable, and the tools available make setup faster than in many other countries. But there are specific Canadian rules — around immigration status, tax residency, and provincial registration — that differ from what you may be used to. This guide covers everything you need to understand before your first invoice.
Immigration Status: Can You Self-Employ?
Your right to self-employ in Canada depends on your immigration status:
- Permanent residents: Full rights to self-employment. No restrictions.
- Open work permit holders: Most open work permits allow self-employment. Read your permit conditions — some restrict work type or employer. Common open work permits that allow self-employment include: Spousal Open Work Permit, Post-Graduation Work Permit (PGWP), and many bridging permits. When in doubt, confirm with an immigration lawyer.
- Closed work permit (employer-specific): These typically do not authorize work for any other employer, including clients as a freelancer. Self-employment on a closed permit can violate your permit conditions. Consult an immigration lawyer before proceeding.
- International students: Student permits allow limited on-campus or off-campus work. Self-employment generally requires specific authorization. Do not self-employ without confirming your student permit conditions.
Practical First Steps
1. Get a SIN
Your Social Insurance Number is required for all CRA filings, banking, and business registration. Apply at Service Canada immediately upon arrival. Processing is usually same-day. Newcomers on temporary status receive a SIN starting with 9 — this works identically for all self-employment purposes but expires when your immigration status expires.
2. Open a Business Bank Account
No credit history required for digital banks. EQ Bank Business (online, no monthly fee, unlimited transactions) or Wealthsimple Business are accessible to newcomers with a valid SIN and government ID. For international clients, add Wise Business ($55 one-time) for USD/EUR receiving at mid-market rates.
3. Set Up Invoicing
Wave (free) handles invoicing and accounting for most newcomer freelancers. Configure your province’s GST/HST rate and your payment instructions (e-Transfer email for Canadian clients, Wise account details for international clients). You do not need to register for GST/HST immediately unless you expect to quickly exceed $30,000 in revenue.
4. Understand Canadian Tax Obligations
As a Canadian tax resident, your worldwide income is taxable in Canada from your arrival date. File a T1 return with T2125 annually by June 15. Pay any balance owing by April 30. Set aside 25–30% of every payment for income tax and CPP contributions.
How Canada Is Different from Other Countries
- No VAT recovery for small businesses: Unlike EU countries where all businesses claim back VAT, Canada’s GST/HST ITC system only applies once you register — and registration is optional until $30,000
- CPP is significant: 11.9% on net self-employment income is larger than pension contributions in many countries
- Provincial differences matter: Tax rates, business registration requirements, and HST/PST rules differ by province
- e-Transfer is universal: Canadian clients expect to pay by Interac e-Transfer — the equivalent of SEPA in the EU but more widely used for individual and small business transactions
Frequently Asked Questions
Can I serve international clients from Canada?
Yes. Once you are a Canadian tax resident, you pay Canadian income tax on worldwide income — including what US, UK, and European clients pay you. This is standard. Services exported to foreign clients are zero-rated for GST/HST (you don’t charge GST/HST to non-Canadian clients). Foreign income is converted to CAD at the Bank of Canada rate on the date received and reported on your T2125.
What if my immigration status changes while I’m self-employed?
Changes in immigration status affect your work authorization, not your tax residency. If your work permit expires and is renewed, you continue to be a Canadian tax resident throughout. If you leave Canada permanently, you file a departure return for the year you leave. Keep your immigration status and your tax status as separate considerations — report to the CRA based on residency, not immigration classification.
Do I need a Canadian business registration to invoice international clients?
No. You can invoice international clients from Canada using your legal name, with no provincial registration required (unless using a trade name). A CRA Business Number is needed only if you are registered for GST/HST. International clients pay you based on your contract terms — they do not require a Canadian registration number to send payment.