I'm starting a home-based business and make very little. Do I have to worry about income tax?

2 Answers 2


TaxTips.ca's Federal Tax Rates page has basic information about income tax in Canada, and it states:

Canadian federal income tax is calculated based on taxable income, then non-refundable tax credits are deducted to determine the net amount payable. For 2009, every taxpayer can earn taxable income of $10,320 ($9,600 in 2008) before paying any federal tax. [...]

(emphasis mine)

Of course there are also provincial taxes to consider, but generally each province has a basic personal exemption amount. TaxTips.ca's page for Ontario rates lists $8,881 as the basic personal exemption in Ontario, for 2009. Find other provinces here.


According to the government website, the answer appears to be no in terms of personal income. However you may want to anyway to start creating RRSP contribution room as well as possibly qualify for GST/HST credit.

If your business is registered you are going to be required to file a tax return for it (and if it is a sole proprietorship then you would be required to file a T1 regardless).

When all is said and done, it seems that it's probably better to file rather than not file; even if you pay no income tax at least you are sure you won't receive a nasty letter from Revenue Canada in the future :)

  • Hi Jedidja. The second link you posted refers specifically to a small amount of income: $2000, which happens to be below the basic personal exemption. But, personal income (in general) is not exempt from tax. But I agree with the rest of your advice; better to file anyway and create the RRSP room & qualify for GST/HST credit. Feb 18, 2010 at 0:13
  • Answering the question is a bit tough. The title asks about "not having to file a tax return" and the questions says "worry about income tax". I believe as long as you don't owe any income tax, you aren't required to file. So all the way up to basic allowance you have listed below. $2000 qualifies as well $10,320 -- the govt site says that you /have/ to file a return if you have to pay tax. Presumably the reverse is also true? :)
    – Jedidja
    Feb 18, 2010 at 20:08
  • Yes - the way I understand the reverse is: If you don't owe tax, you don't have to file... except if the government asks you to prove that you don't owe! :-) Feb 19, 2010 at 1:16
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    Totally agree :) Also if the original poster has filed in previous years it may look somewhat suspicious if she does not file this year. There are a lot of variables here; I think we can all agree the best thing is to file regardless.
    – Jedidja
    Feb 19, 2010 at 2:08

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