> ## Content Index > Fetch the complete content index at: https://learn.sansarsolutions.com/llms.txt > Use this file to discover other available public pages before exploring further. # Self-Employed and Haven't Filed in Years? How to File Multiple Years of T1 and T2125 - URL: https://learn.sansarsolutions.com/self-employed-multiple-years-back-taxes/ - Published: 2026-10-16T16:00:22.000Z - Updated: 2026-10-16T18:24:54.000Z - Description: How sole proprietors catch up several years of T1 and T2125 returns: the order to file, GST/HST, self-employed CPP, and when to incorporate. - Author: Gurdeep Sangha - Tags: CRA Problems **If you're self-employed and several years behind, rebuild each year's business income and expenses on a T2125, file the T1s oldest first (certified software for recent years, paper for older ones), and file any GST/HST returns for the same periods.** Sole proprietors pay both halves of CPP on self-employment income, so a profitable year can owe more than people expect. Before you file anything, check whether the Voluntary Disclosures Program is still open to you, because that decision is easier to make before the CRA contacts you. Falling behind as a sole proprietor is common. There's no payroll department, no corporate year-end forcing a deadline, and often no bookkeeper. One busy season turns into a skipped return, and the second year feels harder to start than the first. The good news is that the process for catching up is the same whether you're one year or six years behind. It just takes more records. ## The deadlines that applied Self-employed individuals (and their spouses or common-law partners) have until **June 15** to file their T1, but any balance owing was due **April 30** ([canada.ca, T4002 business and professional income guide](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4002.html?ref=learn.sansarsolutions.com)). That gap catches a lot of people. Interest on each year's balance runs from April 30, compounded daily, even if you file by June 15. For every year that's late and has a balance owing, the CRA's late-filing penalty is 5% of the balance plus 1% for each full month the return is late, up to 12 months. If you were already charged a late-filing penalty in one of the three previous years and the CRA had sent a demand to file, the repeat penalty doubles to 10% plus 2% a month, up to 20 months. Our guide to [CRA late filing penalties](https://learn.sansarsolutions.com/cra-late-filing-penalties-explained/) walks through the formulas with worked examples. If a year shows no balance owing, or a refund, the percentage penalty is generally nil. That's one reason to file the easy years quickly. ## What the CRA may already know Being behind doesn't mean the CRA is in the dark. It often has some of your income already: - **T4A slips** from clients that paid you as a contractor. - **T5018 slips** if you work in construction. - **Platform reporting** from sharing-economy and online marketplace operators under the newer digital platform rules. - **GST/HST returns** you did file, which show your sales. When the CRA has that information and no return, it can send a [demand to file](https://learn.sansarsolutions.com/missed-cra-demand-to-file-deadline/) or raise an [arbitrary assessment](https://learn.sansarsolutions.com/reverse-cra-arbitrary-assessment/) based on the slips alone, with no expenses deducted. Those assessments are usually higher than the real tax, and they're fixed by filing the actual return. ## Order of operations 1. **Get your CRA records.** Download your slips, prior notices of assessment, and any GST/HST account history from My Account or through a representative. This tells you which years are missing and what income the CRA is already matching. 2. **Rebuild each year from bank and card statements.** Start with deposits (income), then categorize expenses. If you're missing statements, banks can usually provide older ones on request. 3. **Separate personal from business.** Most sole proprietors run everything through one account. Personal spending comes out, and business costs paid personally go in. 4. **Prepare the T2125 for each year.** This is where gross income, expenses, capital cost allowance on equipment and vehicles, and business-use-of-home are reported ([canada.ca, completing form T2125](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/report-business-income-expenses/completing-form-t2125.html?ref=learn.sansarsolutions.com)). 5. **Deal with GST/HST.** File the returns for any periods you were registered, and check whether you should have registered once you passed the small supplier threshold over four consecutive calendar quarters. 6. **Decide on VDP before filing.** If the CRA hasn't contacted you about these years, the [Voluntary Disclosures Program](https://learn.sansarsolutions.com/cra-voluntary-disclosure-program-changes/) may reduce penalties and interest. Once a demand letter arrives, that door is largely closed for the years it covers. 7. **File the T1s oldest first,** then pay or set up a payment arrangement for the balance. ## Why oldest first Each T1 feeds the next. Unused business losses, capital cost allowance balances, RRSP deduction room, tuition carryforwards and instalment history all carry from one year to the following one. File them out of order and the later returns are built on numbers that may change. The exception is when the CRA has demanded a specific year. Then that year goes first, and the rest follow in order. ## Self-employed CPP: the line people forget Employees pay half of their CPP and the employer pays the other half. When you're self-employed, you pay both, calculated on Schedule 8 of your T1 based on net self-employment earnings. Higher earners also pay the second-tier CPP2 contributions introduced in 2024\. Half of the contribution is deductible, and the other half generates a non-refundable credit, but the total is still a real cost. This is often why a sole proprietor's balance is larger than they guessed. Income tax on a profitable year plus both halves of CPP, plus interest since April 30, adds up quickly across several years. ## Expenses you can still claim Late returns can claim the same expenses as on-time ones, as long as you have the records. The common ones for service businesses: - Business-use-of-home, based on the share of your home used for work. - Vehicle expenses, based on the business-use percentage. A logbook helps, and a reconstructed log from calendars and invoices is better than none. - Phone, internet, software and subscriptions (business portion). - Professional fees, insurance, advertising and subcontractors. - Capital cost allowance on equipment, computers and vehicles. Keep the documents. The CRA can ask for support, and business records generally need to be kept for six years from the end of the last tax year they relate to. ## When you've outgrown sole proprietorship Many of the owners we help grew steadily as sole proprietors and never incorporated, or incorporated partway through a year but kept filing everything personally. If you did incorporate, the income earned after incorporation belongs on the corporation's T2, not your T1, and the two have to be untangled. Our guide on incorporating but still filing as a sole proprietor covers that split. If you haven't incorporated yet, the catch-up is a good moment to ask whether you should. It's usually worth a conversation once profits are well above what you take home to live on, but it's not automatic. Incorporating adds a T2, annual registry filings and more bookkeeping each year. ## Example (hypothetical): a Surrey marketing consultant A Surrey marketing consultant worked as a sole proprietor for three years without filing and passed the GST small supplier threshold in the first year. Clients had issued T4A slips for some of the work, and the CRA had started matching them. The catch-up included: - Three T2125s, rebuilt from bank and credit card statements, with a home office and a reconstructed vehicle log. - GST registration backdated to the date it became required, and GST returns for every period since. - Three T1s filed oldest first, with self-employed CPP calculated on each. - A payment arrangement for the balance, set up once the final number was known. Because the consultant had not yet received a demand to file, a voluntary disclosure was considered before anything was filed. ## If you also owe GST/HST GST/HST collected from customers is held in trust for the government, so the CRA treats it more seriously than income tax. If you were registered, every missed period still needs a return, even if the return shows nil. If you should have registered but didn't, you generally owe the GST/HST you should have charged, whether or not you collected it. Our guide to [catching up late GST/HST returns](https://learn.sansarsolutions.com/catch-up-late-gst-hst-returns/) covers how to approach several years of missed periods. ## If you can't pay the full balance File anyway. The late-filing penalty is tied to the return, and filing stops it from growing. Interest still runs on the unpaid balance, but you can set up a payment arrangement with the CRA. If illness, a family emergency or another situation outside your control caused the delay, you can also ask for [taxpayer relief on penalties and interest](https://learn.sansarsolutions.com/cra-taxpayer-relief-penalty-waiver/) once the returns are in. ## Help Sansar handles T1 and T2125 catch-up with the GST/HST behind it, for one all-inclusive flat rate, no hidden fees, no retainer; 50% deposit to start and 50% on completion, after you approve your filings, backed by our 100% Happiness Guarantee. We rebuild the books, prepare every year in order, and talk through VDP and payment options with you before anything is filed. See [late tax filing](https://learn.sansarsolutions.com/late-tax-filing/), the main-site guide to [taxes for independent contractors in Canada](https://sansarsolutions.com/taxes/taxes-for-independent-contractors-canada-basic-guide/?ref=learn.sansarsolutions.com), our [catch-up bookkeeping and taxes service](https://sansarsolutions.com/catch-up-bookkeeping-and-taxes/?ref=learn.sansarsolutions.com) and our [late business tax filing service](https://sansarsolutions.com/late-business-tax-filing/?ref=learn.sansarsolutions.com). [**Book a call →**](https://sansarsolutions.com/contact/?ref=learn.sansarsolutions.com) · [How onboarding works and what documents we need →](https://learn.sansarsolutions.com/how-onboarding-works/) ## FAQ **Can I e-file tax returns for previous years?** Generally yes for recent years, using NETFILE-certified software that supports those years, or through a representative using EFILE. Older years may need to be filed on paper. **Do I have to file if I didn't make a profit?** If you owe nothing, the late-filing penalty is generally nil, but filing still matters. It records business losses you can carry forward, keeps benefits and credits flowing, and stops the CRA from assessing you on slips alone. **Do I owe CPP on self-employment income?** Yes. Self-employed people pay both the employee and employer share of CPP on net self-employment earnings, calculated on Schedule 8 of the T1. **What if I should have registered for GST years ago?** You generally owe GST/HST from the date registration was required, even if you didn't charge it. The fix is to register with an effective date back to that point and file every period since. **Which year should I file first?** Usually the oldest, so carryforwards and balances flow correctly into later years, unless the CRA has demanded a specific year. **Can I still get a refund for an old year?** For individuals, a refund for a year is normally only paid if the return is filed within three years after that year ends. After that, the CRA can still issue it at its discretion for up to 10 years, but it isn't guaranteed. --- *Written by *Gurdeep Sangha*, founder of* [*Sansar Solutions*](https://sansarsolutions.com/about/?ref=learn.sansarsolutions.com)*, a Vancouver-based bookkeeping and tax firm serving small businesses across Canada (mainly Ontario, Alberta and BC). Bookkeeping and tax filing for business owners, without CPA-firm pricing. When you need a Notice to Reader or review engagement, we bring in our partner CPAs. This guide is general information, not tax or legal advice for your situation. Last reviewed: October 2026.*