Maroof HS CPA Professional Corporation, Toronto

Business and Professional Income (T1)

Information needed for the preparation of T1 Return of Self-employed individuals in Canada

Business or Professional Income on T1

If you have a business income or professional income, please provide the below information. Please note this is applicable to any unincorporated form of business, also known to some as self-employment income.

You must ensure that you provide the below information in one file or submission. If during the process of gathering this information if you are not sure, you can always ask us! Further, you can provide this information in any form, such as a spreadsheet, word document or a pdf file.

Please do not send the receipts or the raw data unless you have asked us for a bookkeeping service too. If you have not requested bookkeeping service, and we have to perform bookkeeping, you can expect an additional invoice based on the number of hours spent.

Please note the above information is applicable to common situations. You can always call us if you run into any problem while collecting this information.

Lost or overwhelmed?

Don’t worry, download the spreadsheet and fill it up. Email to mentioning your Client Request No. in the subject (For example, Client Request#XX).

Information about the business or professional activity

  1. Business name (if different than your legal name) such as some trade name. This is usually found on Master Business License in Ontario. 
  2. Business address: if different from your address.
  3. Business number: If you are registered for payroll, GST/HST or import-export program account use the same number
  4. If this is the last year of your business? Yes/No
  5. Main product or service of your business
  6. Industry code: If you do not have one, that’s alright, we’ll choose the appropriate one based on your product and services.
  7. If you are running a business on the internet: How much percent of your revenues came from those web pages? Please provide a list of those web pages.
  8. Are you running the business in partnership with someone or your spouse? Please mention their details and percentage share

Your Revenues

Please provide the below information as one figure for each item in Canadian dollars. If you have sales in foreign currency and you do not know how to convert to CAD, please ask for bookkeeping assistance. 

  1. Your total sales in the year from products and services without GST/HST
  2. Your GST/HST number (Only if you are registered for GST/HST)
  3. GST/HST collected during the year on the above sales
  4. Do you use a quick method for GST/HST? Only if you made a valid election for that. If you do not understand the term, it’s likely that you did not elect.
  5. Any reserves? If you do not understand the reserves, it’s likely that you do not have any. 

Costs, expenses and other information 

Below information is needed to determine your expenses and the applicable deductions.

Note, if you are registered for GST/HST and do not use the quick method, please provide totals of all these categories by inserting three below columns for each expense/cost category:

  1. Amount without GST/HST
  2. GST/HST paid (as shown on your receipt)
  3. Total paid amount including GST/HST

Categories of expenses and costs are listed below. If there is a major expense that you cannot categorize in the below list, please ask for assistance. 

  1. Purchases of materials during the year. Materials that are used directly for making your products.
  2. Wages you paid to your employees. (you are not your employee here so please do not mix your withdrawals as wages)
  3. CPP and EI paid to CRA (employer portion only), please do not include what you deducted from your employee
  4. Subcontractors, are those who you did not hire as employees and make occasional payments for services.
  5. Any other cost used in the production process
  6. Do you hold inventory? If yes, Opening and closing inventory for the year
  7. Advertising 
  8. Meals and entertainment – full amount 
  9. Bad debts – if someone did not pay you, and you already included them in sales in the current or previous year. Just make sure you do not mention this amount if you already claimed bad debt before or removed the amounts from your sales. 
  10. Insurance 
  11. Interest and bank charges
  12. Professional fee, legal, accounting and tax prep fee
  13. Management and administration fees 
  14. Rent
  15. Repair and maintenance – Please be careful if there is a major repair of capital nature, do not include it here. Ask an accountant for determination. 
  16. Salaries, wages and benefits (including employer’s contributions) – Office, the management or administrative staff
  17. Property taxes. Do not include your house’s property taxes. Provide them separately for office-in-home expenses
  18. Travel expenses (business travel only)
  19. Utilities
  20. Fuel costs other than motor vehicles
  21. Any other expenses. Please make one or two categories of them and mention them in the list

If you use your home for business

Please provide the below information. Make the totals of expenses listed and do not send bills or raw data.

  1. The total area of your house
  2. Area of the house used for business 

Please do not apportion the below expenses, provide total expenses for the period when you were generating business income. 

  1. Heat
  2. Electricity
  3. Insurance 
  4. Maintenance
  5. Mortgage interest. Please provide the interest portion of your mortgage payments only. Do not make total for mortgage payments. You can find this in your mortgage documents.
  6. Property taxes 
  7. Other expenses: make a list

If your house is your principal residence also we do not recommend claiming Capital cost allowance. If you think you have to please ask the accountant working on your tax return. This is different from capital cost allowance on equipment and other property used in business. 

Capital cost allowance (CCA)

  1. Last year’s tax return to check the balances 
  2. Current years purchases of equipment, building, motor vehicle (see below also for motor vehicle) and other assets. Do not make a total instead give the list of such expenses. 
  3. Cost of your vehicle that is used in business purchased during the year

New 2022: Immediate expensing of certain eligible property acquired after 2021/12/31 and available for use before 2025.

Motor Vehicle used in business

  1. Total of the lease payments made during the year. There are limitations, we’ll make calculations. 
  2. If you own a vehicle? CCA is to be calculated by us. 
  3. If you finance your car, please provided a total of the interest portion of the car loan paid during the year.
  4. Please mention if your vehicle is a zero-emission vehicle
  5. Total mileage of car during the year in KM
  6. How much mileage for business?

Please provide the below expenses of motor vehicles (follow the same process of GST/HST application and payment as mentioned before for expenses) for a full-year or part of the year when the business was running. 

  1. Gas 
  2. Interest on a car loan 
  3. Insurance
  4.  Total of lease payments 
  5. Electricity for zero-emission vehicles
  6. Maintenance and repair
  7. License and registration 

Below are expenses only if used for business:

  1. Parking expenses when using the vehicle for business
  2. ETR Toll 
  3. Additional insurance charges due to the business use

Please note the above information is applicable to simple and common situations. You can always call us  if you run into any problem while collecting this information.

New 2022: Air Quality Improvement Tax Credit

Self-employed individuals have a brand new refundable tax credit for 2022!

This refundable tax credit is 25% of eligible expenses on the improvement of air quality or ventilation at your place of business. For each location, the expenses limit is $10,000 whereas for multiple locations the total limit is $50,000. The applicable period for these expenses is between 2021/09/01 and 2022/12/31.

If you have such expenses, please ensure to provide a list to your tax preparer. 

Picture of Fatima Aslam

Fatima Aslam

Fatima Aslam writes exclusively for Maroof HS CPA Professional Corporation and Innovation Hub on common topics related to business.

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Picture of Fatima Aslam

Fatima Aslam

Fatima Aslam writes exclusively for Maroof HS CPA Professional Corporation and Innovation Hub on common topics related to business.

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