Can I be self-employed with an IEC work permit?
Yes, if you have an IEC Working Holiday open work permit, you can work for different employers and may also be able to work as a freelancer or self-employed person.
The Young Professional category is different. It is an employer-specific work permit, so you can only work for the employer listed on your work permit. You cannot have another job or work as a freelancer or self-employed person.
The benefits of being self-employed
Being self-employed can give you a lot of freedom, which can be especially nice if you are in Canada on a Working Holiday.
Some of the benefits include:
- You are your own boss.
- You can choose which projects you want to work on.
- You can often choose your own working hours.
- You have more flexibility to travel around Canada.
- You may be able to claim certain business expenses on your tax return.
For example, some business expenses may include things like business licences, internet or phone costs, depending on how they are used for your business.
However, you cannot simply claim anything as a business expense. The expense needs to be related to earning your business income.
The disadvantages of being self-employed
You don't get the same benefits as an employee
As a self-employed person, you don’t receive employee benefits such as vacation pay, statutory holiday pay or overtime pay from a Canadian employer.
For example, employees receive statutory holiday pay on public holidays such as Christmas Day, New Year’s Day, Canada Day and Labour Day, depending on the province and their situation. They will also receive extra pay if they work on a statutory holiday.
As a freelancer, you don’t receive these benefits, so you don’t get paid for that day.
No vacation pay: Employees are entitled to vacation pay. In many provinces, the minimum starts at 4% of their wages for the first few years of employment. As a self-employed freelancer, you don’t receive this vacation pay from a client or employer.
You are not eligible for regular Employment Insurance (EI) benefits
You are not eligible for regular Employment Insurance (EI) benefits if your contract ends or you lose your self-employed work. EI is a government benefit that can provide temporary financial support when an employee loses their job through no fault of their own. As a freelancer, you do not have this protection.
There is a separate EI program for self-employed people, but it covers special benefits such as sickness, maternity, parental and caregiving benefits. You need to opt into this program and meet its requirements. It does not provide regular EI benefits when your contract ends.
You have to pay your own taxes
Your employer doesn’t deduct income tax from your payments. You are responsible for reporting your income and expenses and paying any taxes you owe to the CRA.
A good idea is to put some money aside from every payment you receive, so you are not surprised by a large tax bill when you file your tax return.
How much money should I put aside for taxes?
There is no magic percentage that works for everyone because your tax bill depends on your total income, expenses and other circumstances.
However, putting around 25–30% of your income aside can be a useful starting point for some freelancers. Treat this as a safety buffer rather than a guaranteed tax rate.
You pay both sides of CPP
If you are self-employed, you have to pay both the employee and employer portions of Canada Pension Plan (CPP) contributions.
For 2026, the base CPP contribution rate is 11.9% for self-employed workers, with additional CPP contributions at higher income levels.
You may need your own insurance
Regular employees are generally covered by their employer’s workers’ compensation insurance if they are injured at work. As a self-employed person, you need to arrange your own work insurance.
Depending on the type of work you do, you may need health, accident or liability insurance. For example, someone working as a contractor on a construction site may need different insurance from someone working on a laptop from home.
You may need to register a business
If you work as a sole proprietor, you may be able to operate under your own personal name without registering a separate business name.
However, if you use a business name instead of your own name, or if your type of work requires a licence, you may need to register your business. Check the requirements in the province where you live and work.
You may need to pay GST/HST
If your income from self-employment reaches the $30,000 threshold, you must register for GST/HST. The rules depend on when you cross the threshold, so check the CRA requirements if your income is getting close to $30,000.
Once you are registered, you will need to collect, report and send the GST/HST to the CRA. You will also need to file a GST/HST return in addition to your regular tax return.
>> You can find the current GST/HST registration rules on the CRA website.
Keep track of your income and expenses
As a freelancer, it is your responsibility to keep track of your income and business expenses.
Keep your invoices, receipts and other records throughout the year. Your self-employment income and eligible business expenses are reported as part of your personal tax return.
Important if you want to apply for permanent residence
If you are planning to apply for permanent residence through the Canadian Experience Class (CEC), there is an important point to know.
Self-employed work in Canada does not count as Canadian work experience for the CEC.
If Canadian work experience is important for your future immigration plans, this is something you should understand before choosing self-employment.
Am I an employee or self-employed?
An employer cannot simply hire you as a contractor or self-employed because it is cheaper for them and they want to avoid paying their share of CPP and EI premiums and other employer obligations.
There are rules in Canada that determine whether you are an employee or a self-employed worker. The CRA looks at the actual working relationship, including things such as:
- Who controls your work and schedule?
- Who sets your pay?
- Who provides the tools and equipment?
- Where do you do the work?
- How is the work organized?
For example, if an employer sets your schedule, tells you how to do your work, provides the equipment and pays you a set wage, you are actually an employee rather than self-employed.
If you worked as a contractor or freelancer during the tax year, it’s strongly recommended to consult with a tax accountant or advisor, especially if this is your first year reporting self-employment income.
If you’re a sole proprietor, you are required to complete Form T2125 – Statement of Business or Professional Activities.