CRA forms
Form T2125 Explained: Reporting Self Employed Income
June 15, 2027to file a 2026 return that includes Form T2125. Any balance owing is still due April 30, 2027.
Sources checked October 20263 min read
Who files Form T2125
Form T2125, Statement of Business or Professional Activities, is the schedule a self employed person attaches to their personal income tax return. A sole proprietor uses it for business income and expenses, a professional uses it for fees, and a commission salesperson can use it too. A partner reports their share of a partnership's income on it, starting from the T5013 slip where the partnership issues one.
Someone with both business and professional income fills out a separate T2125 for each, and so does someone with more than one business. A corporation never uses the form: an incorporated business files its own T2 return, and the owner reports salary or dividends on the personal return instead.
Key points
- Used by sole proprietors and partners for business, professional or commission income
- Net income from line 9946 goes on line 13500, 13700 or 13900 of the return
- Meals and entertainment are generally limited to 50%
- File by June 15, 2027, pay by April 30, 2027
What each part covers
The form runs to nine pages, but most owners fill in only a few parts. The order matters, because each part feeds the next.
| Part | What it covers |
|---|---|
| Part 1 | The business name and number, the fiscal period, the main product or service and its industry code |
| Part 2 | How many websites or platforms earn income, and what share of gross income they bring in |
| Parts 3A and 3B | Gross sales or professional fees, with sales tax, returns and discounts taken back out |
| Part 3C | Gross business or professional income on line 8299, which goes on line 13499, 13699 or 13899 of the return |
| Part 3D | Cost of goods sold, from opening and closing inventory, purchases, direct wages and subcontracts |
| Part 4 | Business expenses, from advertising to motor vehicle costs and capital cost allowance, ending at line 9369 |
| Part 5 | Your share of the result, less home office expenses on line 9945, giving net income on line 9946 |
| Part 7 | The home office calculation: heat, power, insurance, maintenance, mortgage interest and property taxes |
| Areas A to F | Capital cost allowance for equipment, buildings, vehicles and land bought or sold in the year |
The rules that catch people out
Most self employed income has to be reported on the accrual method: income counts when it is earned, not when the client pays, and expenses count when they are incurred. Farmers, fishers and commission agents may use the cash method instead.
Self employed individuals generally have to use a December 31 year end. An eligible person can keep a different fiscal period by reconciling it to the calendar year on Form T1139, and anyone who filed that form last year generally has to file it again.
- Meals, drinks and entertainment are deductible at 50% of the lesser of the amount spent and a reasonable amount.
- Home office expenses cannot create or increase a business loss. Whatever cannot be used this year carries forward to the next.
- Only the business part of a shared cost is deductible, whether it is a vehicle, a phone or part of a home.
- Where GST or HST is claimed back as input tax credits, expenses go on the form without the tax. A business on the quick method includes the tax instead.
Deadlines and payments
A self employed person and their spouse or common law partner have until June 15, 2027 to file their 2026 returns, but any balance owing is due April 30, 2027, and interest runs from then. Someone whose tax owing passes $3,000 in the current year and in either of the two years before pays instalments on March 15, June 15, September 15 and December 15.
Quick answers
Where does the net income from Form T2125 go on my return?
Line 9946 of the form goes on line 13500 for business income, line 13700 for professional income or line 13900 for commission income. The gross figure from line 8299 goes on line 13499, 13699 or 13899.
Do I need a separate T2125 for each business?
Yes. Each business gets its own form, and so does professional income kept apart from business income.
Can home office expenses create a loss?
No. They are limited to the business's net income before those expenses, and any excess carries forward to the next year.
Related pages
Official sources
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Important. This article provides general educational information, not legal or tax advice for a specific business. Rules, administrative policies, rates and deadlines can change. Confirm your facts and current obligations with the responsible government agency and a qualified adviser.