My understanding is that the first $3500 of self employment income can be deducted, how is this entered ?

The first $3500 of employed/self employed income is exempt from CPP deductions.  The income itself is not a deduction on the tax return.  Bear in mind if you also have employed income this is part of the $3500 exemption.   Therefore if you have $5000 of employed income, then all your self-employment income is subject to calculations for CPP.  The maximum amount CPP is calculated on for 2015 is $53,600.

I am pretty sure TT will do automatically for you.