How Is SKIP Income Taxed?
Your T4A slip from SKIP reports your total earnings. However, your taxable income is what remains after deducting eligible expenses like gas, phone, and vehicle costs.
Formula:
Total SKIP Earnings – Deductions = Net Taxable Income
💡 Example:
Total SKIP earnings: $40,000
Eligible deductions: $10,000 (vehicle expenses, phone, etc.)
Net taxable income: $30,000 (this is the amount taxed)
How Much Should I Set Aside for Taxes?
The amount you owe depends on:
✅ Net taxable income (after deductions)
✅ Federal & provincial tax rates
✅ CPP contributions (self-employed must pay both employer & employee portions)
✅ GST/HST obligations (if required)
A general rule is to set aside 25–30% of your net income.
💡 Example (Ontario Resident, $30,000 net taxable income):
Federal & provincial taxes (~15%) = $4,500
CPP contributions (10.9% on $30,000) = $3,270
Total estimated taxes = $7,770
Suggested savings: $650/month
📌 Tip: Use the CRA’s tax calculator or CloudTax to estimate what you owe.
How Do CPP Contributions Work?
Since SKIP does not deduct Canada Pension Plan (CPP) contributions, you must pay both the employee and employer portion:
10.9% CPP rate (2024) applies on income over $3,500
Maximum CPP payable in 2024: $7,735
💡 Example:
Net taxable income: $40,000
CPP applies to: $40,000 - $3,500 = $36,500
CPP owed (10.9% of $36,500): $3,978.50
Do Couriers on SKIP Need to Register for GST/HST?
If you earn more than $30,000 in a 12-month period, you must register for GST/HST and charge sales tax on your earnings.
What this means for you:
If under $30,000: No GST/HST registration required
If over $30,000: Register, charge GST/HST, and remit it to the CRA
💡 Tip: Registering for GST/HST voluntarily lets you claim Input Tax Credits (ITCs) on gas, phone, and vehicle expenses, helping reduce your tax bill.
When Are Taxes Due?
Most self-employed workers pay taxes once a year, but if you owe more than $3,000, the CRA may require quarterly installment payments.
🚨 Key Deadlines:
🗓 April 30 – Payment deadline (avoid penalties & interest)
🗓 June 15 – Filing deadline (for self-employed)
How to Avoid Tax Surprises
✅ Track your earnings & expenses throughout the year
✅ Set aside 25-30% of your income for taxes & CPP
✅ Make quarterly payments if you owe more than $3,000
✅ Use CloudTax to simplify tax filing and maximize deductions
By staying organized, Couriers on SKIP can avoid tax headaches and keep more money in their pocket at tax time! 🚗💨