Can I be self-employed with the Working Holiday?
The Working Holiday is an open work permit, which means you’re allowed to work for any employer in Canada. You can do this either as an employee or as a self-employed freelancer or contractor, as long as the job is not one of the few specifically excluded on your work permit.
In contrast, the Young Professional is a closed work permit, which ties you to one specific employer. Under this permit, you cannot take on part-time or freelance work, even outside your regular job.
That said, if you hold an open work permit like the one from the Working Holiday program, you’re allowed to work as a freelancer or independent contractor in Canada.
There is one exception for closed work permits (such as those in the Young Professional program or with an LMIA-based permit). You are allowed to do remote work for clients outside of Canada, as long as you have no Canadian customers or business connections. This means you cannot actively market, meet, or work for Canadian clients while under a closed work permit.
The main benefits of being a freelancer
You’re your own boss. You have full control over your work and decisions.
You set your own pay. Often, the pay is higher compared to similar employee roles, and you decide your rates.
You choose your projects. You have the freedom to accept only the work that interests you or aligns with your skills.
Flexibility: You decide how much work to take on. If you need more income, you can seek out more clients; if you want time off, you can scale back. You can adjust your workload around personal plans or travel goals.
You can work from anywhere. Whether it’s a coffee shop, or a picnic spot in the Rockies, your workspace is up to you.
No fixed hours. You create your own schedule, which is ideal if you’re traveling across Canada and want to make the most of your time here.
Tax advantages. As a self-employed individual, you can claim a wide range of business expenses that regular employees cannot. These may include travel costs, business licenses, internet and phone bills, equipment, and other necessary expenses related to your work.
The main disadvantages of being a freelancer
As a self-employed individual in Canada, there are several key differences compared to being an employee:
No Overtime Pay: Unlike employees, you don’t receive overtime pay for working beyond regular hours.
No Vacation Pay: You won’t receive the usual 4% vacation pay added to your income, which is typical for employees.
No Holiday Pay: You don’t get extra pay for statutory holidays, of which there are nine in Canada.
Mandatory CPP Contributions: Since you are your own employer, you’re responsible for paying both your own share and your employer’s share of Canada Pension Plan (CPP) premiums. In 2025, this amounts to 11.9%, on top of your regular taxes.
No Employer Benefits: Employees often receive benefits like health insurance, dental coverage, or life insurance through their employer. As a self-employed you must arrange and pay for these benefits.
No Workplace Insurance: As a self-employed person, you’re not covered by workplace insurance. You’ll need to purchase your own business health/accident insurance, which can be expensive.
Liability Insurance: You must also secure liability insurance. While it may not be a big issue for office-based work from home, it’s critical if you work as a contractor in fields like construction, where mistakes could lead to significant legal and financial consequences. The employer, in this case, is not liable since you are hired as an independent contractor.
Personal Responsibility: As a self-employed sole proprietor, you are personally responsible for your mistakes. In the event of a lawsuit, the court could pursue your personal assets, including bank accounts, your home, or car.
No Unemployment Benefits: If you’re laid off or your contract ends, you aren’t entitled to unemployment benefits.
Tax Responsibility: You’re responsible for paying your own income taxes directly to the CRA (Canada Revenue Agency), as employers will not deduct any taxes from your earnings.
A few important other things to keep in mind:
If you plan to immigrate to Canada through the Canadian Experience Class under the Express Entry program, be aware that self-employment does not count toward your Canadian work experience requirement.
When it comes to invoicing, you don’t need to register a business name as a sole proprietor if you use your personal name as the company name. However, if you issue invoices under a different business name, you must register that name.
Additionally, in some provinces, you are required to apply for a business license. Therefore, it’s important to check the specific regulations in the province where you intend to operate.
If your self-employed income exceeds $30,000 over four consecutive calendar quarters, you must register for a GST/HST account. At that point, you are required to:
- Charge GST/HST on your invoices
- File a GST return
- Remit the collected taxes to the Canada Revenue Agency (CRA)
More information is available on the CRA website [here].
As a sole proprietor, you are responsible for tracking all income and expenses related to your business. You report your self-employment income together with your personal tax return. This involves filling out a specific form: the T2125 – Statement of Business or Professional Activities, which details your business income and expenses.
The CRA will then calculate your taxes based on your total income for the tax year.
For more detailed information on the difference between being an “Employee or Self-employed,” you can find helpful resources on the CRA homepage [here].
If you have many expenses, it’s a good idea to have an accountant handle your taxes. They can help maximize your tax deductions and ensure you don’t miss any potential savings.
To avoid a big shock when tax season comes around, try setting aside about 30% of your earnings for taxes. This way, you’ll be better prepared when the bill arrives.