How Taxes Work in Canada for a Private Tutor

Private tutoring in Canada can be a rich and rewarding way to work - you have the opportunity to teach, help others, and share your knowledge all while running your own business. The demand for private tutors today is the highest it has ever been, with tutors available for all sorts of subjects and skills with varying qualifications and experience. Due to this rise in popularity private tutoring incomes are being monitored more closely than ever by the Canadian Revenue Agency (CRA).

When tax season arrives, it is important to understand how to report your income and claim expenses so you can make the most of your situation. As a tutor, you may be considered self-employed and a sole proprietor, no matter how small or large your business is. As such, you have certain responsibilities, such as adhering to tax laws and reporting what you earn to the CRA every year. This is called a tax return, and can be done online.

Reporting your income is a straightforward process, it doesn't have to be complicated or confusing. We will give tax tips, answer the questions that tutors frequently ask when starting their business, and show you everything you need to do to record your income and file a tax return in Canada.This guide will walk you through everything you need to know about tutoring in Canada when it comes to income tax. Let's get started!

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Do I Have to Report Tutoring Income?

In short, yes - you will have to report tutoring income if you are self-employed or your tutoring income is not being taxed by an employer (ex. you are an employee of a tutoring company).

There are many regulations surrounding tutoring as a self-employed individual. For this reason, it is important to understand exactly what it means to be "self-employed". Let's take a closer look at the main scenarios in which you might work as a tutor.

How Taxes Work in Canada for Self-Employed Tutors

Unlike working for an employer, the taxes of a self-employed tutor are not automatically deducted from earned income. Some tutoring companies operate Pay as You Earn (PAYE), working as a middleman between the tutor and the student.

If you work for an agency with PAYE, your work will likely be taxed at source, so there will be no paperwork for you to deal with. This will usually mean as well that you pay a small payroll fee.

Some tutoring agencies, including Superprof, operate on the basis that all payment is to be managed solely between the tutor and the student.

This means that all payment and income records are your own responsibility, and you must therefore keep a detailed record of your earnings for CRA. You are responsible for:

• Paying income tax
• Paying both portions of the Canada Pension Plan (CPP) contributions
• Tracking and filing HST/GST, if your gross revenue exceeds $30,000/year

You do not receive a T4 slip; instead, you must calculate and report your income and expenses yourself.

How to Claim Tutoring Income on Taxes in Canada

If you are tutoring under the "self-employment" category (ex. you are billing clients directly), you need to report the income you have generated on Form T2125: Statement of Business or Professional Activities when filing your personal tax return. This form will enable you to report gross income, deduct eligible expenses, and calculate your net income for tax purposes.

To report your gross income and claim eligible expenses, you will want to prepare long before tax time. In becoming a private tutor, you should be keeping records of your income and have all the relevant paperwork up to date to make this process as straightforward as possible. This means:

• Keeping a log of your hours and client sessions.
• Keep detailed records (ie. invoices) of all payments received.
• File and save all receipts and invoices for allowable business expenses.

Even if you work as a tutor on the side you still need to keep track of your tutoring income. You will need to pay tax on it.

By keeping all of your paperwork organized, you will be prepared to provide accurate data on your tutoring income, claim expenses on pre-tax revenue, and have your documents in order should the CRA decide to perform an audit.

When you're all set up and ready to start tutoring read up on how to motivate your students and improve their learning.

What Expenses Can Tutors Claim?

Certain expenses are important to keep track of when completing your tax return, as you can deduct those costs from your taxable profits, which will reduce your tax bill. If you happened to pay for a criminal record check, for example, you may be able to write the expense off.

In addition to the cost of a criminal record check, tutors can deduct a wide range of expenses related to running their tutoring business. Here are some common eligible deductions:

• 📱 Phone and internet costs (portion used for business)
• 🧾 Advertising and marketing
• 🖨️ Office supplies (e.g., printer ink, notebooks)
• 📚 Reference materials and educational books
• 🧑‍🏫 Professional development (e.g., workshops, courses)
• 💻 Software and subscriptions (e.g., Zoom, Canva)
• 🏠 Home office expenses, if you tutor from home

Here is an example of how a tutor might keep track of their business expenditures. As always, keep a digital copy of the expense reciepts or take a photo to keep on file.

Jan Expense List	Price
Paper	$5.14
Pens	$4.22
Internet	$64.90
Gas (for tutoring)	$62.30
Laptop	$602.90

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How Much to Charge for Tutoring - Tax Considerations

In Canada, there are thousands of people offering tutoring jobs in each province. For many, a teaching job is a side hustle while others consider it as full-time employment. In places like Toronto and Montreal, teaching jobs are a side hustle for many students in colleges and universities to earn extra income.

That said, the rate you charge as a tutor may differ depending on your precise location in Canada, the academic level of the student, the subject or skill being taught and whether the lessons are taught via webcam or at home.

It’s also important to factor in the cost of self-employment. Unlike salaried employees, you’ll be responsible for:

• Paying your own taxes and CPP
• Covering business expenses
• Saving for time off and benefits

For example, if you want to earn $40/hour net, you may need to charge $50–$60/hour to account for taxes and overhead. If you are making over $30,000 a year through tutoring, you will have to apply for an HST number. Once you have an HST number, however, you can add HST to your invoices which will help you to set aside money for when tax time arrives.

Consider working with a tax professional to determine a rate that reflects your goals and obligations.

How to Avoid Double-Taxation (For Ontario-Quebec or U.S./Canada Tutors)

If you tutor across provincial or international borders, either virtually or in-person, it’s crucial to understand the possible implications for taxes.

Ontario–Quebec:

• Income earned in Quebec may be subject to Revenu Québec regulations.
• See the Revenu Québec website or consult a tax professional for clarification.

U.S.–Canada:

• The Canada–U.S. trade and tax agreements are subject to change - be sure to check the CRA website or consult with a licensed tax professional for clarification.
• U.S.-based tutors working with Canadian clients may need to file Form W8-BEN to avoid withholding taxes.

Always consult a tax advisor familiar with cross-border self-employment. You will save yourself lots of time and resources by filing your taxes correctly.

Private Tutor Income Tax: Canada Examples

Let's look at some examples of private tutor incomes and some scenarios for taxes. Keep in mind that these examples are high-level and simplified. You will need to keep detailed records of items like income through invoicing and expenses through reciepts.

Example 1: Part-Time Online Tutor in Ontario

• Income: $12,000/year
• Expenses: $2,000 (internet, supplies, home office)
• Net taxable income: $10,000
• CRA Form: T2125

Example 2: Full-Time In-Home Tutor in Quebec

• Income: $45,000/year
• Expenses: $8,000 (travel, books, marketing)
• Net income: $37,000
• May need to file with both CRA and Revenu Québec and acquire an HST number

Examples of How Tutors Might Organize their Business Records

As a self employed teacher, you are legally obliged to keep accurate and detailed records of what you earn. This is necessary so that CRA can calculate your taxes correctly. This will also help you keep your business organized and will make your tax return easier.

To keep on top of your records, you can organize your income into logs of income and allowable business expenditure, along with their relative dates.

Date/Time	Student	Lesson Length	Tutor Fee
Jan 1st, 2023	Sara Michelle	1 hour	$25
Jan 3rd, 2023	Mike Thompson	2 hour	$50
Jan 4th, 2023	Jack Miner	2 hour	$50
Jan 5th, 2023	Lucy Gail	1 hour	$25

It is important to keep records of everything that you earn. This can be done in a Word document, Excel spreadsheet or a notebook, for example. You can also keep a log of your expenses, which can include: travel, advertising, books, stationery, insurance and the business use of your home.

Keeping clear, detailed and dated logs of what you earn is the best way to keep on top of your business and will help you fill out your self-assessment forms quicker and more easily.

Make sure everything you record is honest and accurate, and take the time to double-check all the information you input into your books, documents or spreadsheets to make sure there are no typos or mistakes.

How to Calculate Estimated Taxes as a Private Tutor

Fortunately, you don’t have to be a tax professional to be able to calculate your taxable income or tax estimates as a private tutor.

Many people with tutoring jobs in Canada use QuickBooks Self-Employed to keep track of their expenses, income, mileage as well as calculating their estimated taxes all year round.

The software does all the calculations for you. So you can easily report your income and meet up with Canada’s estimated tax deadline.

Alternatively, you could make use of writing logs. But you must be careful with it because they are more vulnerable to damages. Many private tutors consider online spreadsheets as a better option than writing logs. This is because they are easy to share and file appropriately.

Tools for Filing your Taxes as a Private Tutor

Now that you know when to calculate your estimated tax, it’s time to get your payments ready! As expected, you are not left without options.

With QuickBooks Self-Employed, private tutors can file their quarterly estimated tax electronically directly to the CRA. This method is faster and more accurate because you won’t have to re-enter any information.

Another quick way, is to set up the CRA as a bill payment with your bank. The CRA has made it easy to pay them so you don't have to stress.

If the above options didn’t work for you, you could mail your payment directly to the CRA. They have several mailing addresses. Just choose any one that is closest to your location in Canada. Ensure you postmark all payment by the due date to avoid incurring penalties on overdue taxes.

Are Tutoring Fees Claimable as an Expense On Income Tax?

If you are not a tutor but the tutee, the simple answer is YES, but certain conditions have to be met first. Following the Canadian Revenue Agency, any tutoring service offered to a person with a learning disability is considered as an eligible medical expense for the student.

Medical expenses are legally used to reduce the amount of tax payable to the authorities. This is because they are non-refundable tax credits. Tutoring fees are to be included with other medical expenses such as vision care and other related medical expenses.

However, the student must obtain a written letter from a medical practitioner in Canada, to certify that such service is required. This is not referring to just any medical practitioner. The law states explicitly the specific medical experts that are acceptable. See the full list by CRA.

Do You Need Any Evidence to Declare Tutoring Income?

What Will Happen If You Fail to Report Income from Tutoring Jobs?

According to the Canadian Revenue Agency (CRA), there are specific penalties for failure to report a taxable income. The penalty is 20% of the unreported income as 10% represents federal penalty and provincial penalty, respectively.

And what if you consistently fail to report your income from teaching jobs? The penalties would become very severe.

Following the CRA guideline, the penalty is triggered when the unreported income tax becomes equal to or higher than $500. The penalty is usually assessed on the most recent amount of unreported income, irrespective of the amount.