CRA Form T2125 Statement of Business or Professional Activities
Report your self-employment business or professional income and expenses on your Canadian income tax return.
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About T2125
Form T2125, Statement of Business or Professional Activities, is used by self-employed individuals, sole proprietors, and partners to report income and expenses from a business or profession. It is filed together with your T1 personal income tax return with the Canada Revenue Agency.
The form separates business income from professional income and lets you deduct eligible expenses to arrive at your net income or loss for the year. It also captures details such as cost of goods sold, capital cost allowance, and business-use-of-home expenses.
Most freelancers, contractors, gig workers, and small business owners who operate as unincorporated businesses complete a T2125 for each business they run. The net amount then flows into the appropriate line of your T1 return.
Who needs to complete it
- Self-employed individuals and sole proprietors earning business income
- Professionals such as consultants, tradespeople, and practitioners reporting professional income
- Partners in a partnership reporting their share of business income
- Freelancers, contractors, and gig economy workers
- Anyone reporting commission income from self-employment
How to fill out T2125
- 1Enter your identification details, including your name, business name, address, and the fiscal period being reported.
- 2Indicate your main product or service and the applicable industry code for your activity.
- 3Report your gross business or professional income for the period.
- 4List and total your eligible business expenses in the appropriate categories.
- 5Calculate cost of goods sold if you sell products, and determine your gross profit.
- 6Claim capital cost allowance for depreciable property where applicable.
- 7Calculate business-use-of-home expenses if you qualify to claim them.
- 8Determine your net income or loss and carry the amount to the correct line of your T1 return.
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Frequently asked questions
Who has to file a T2125?
Anyone who earns self-employment income from a business or profession as an unincorporated individual generally reports it on Form T2125 as part of their T1 return.
Can I file more than one T2125?
Yes. If you operate more than one business or profession, you complete a separate T2125 for each activity.
Does the T2125 replace my T1 return?
No. The T2125 is a supporting statement. The net income or loss you calculate is carried to your T1 personal income tax return.
What expenses can I deduct?
You can deduct reasonable expenses incurred to earn business income, such as supplies, advertising, and vehicle costs. Keep records to support every claim.