A Guide to Filling Out T2125 for Business and Professional Income in Canada 

Introduction: When reporting business or professional income in Canada, individuals who are self-employed need to prepare a T1 Return. This guide provides a comprehensive overview of the information required for this process. 

Key Information Required: 

• Business or Professional Income Details: 
• Business name (if different from your legal name). 
• Business address (if different from your personal address). 
• Business number (used for payroll, GST/HST, or import-export program). 
• Whether this is the last year of your business. 
• Main product or service offered. 
• Industry code (if unknown, it can be determined based on your offerings). 
• Details about online business activities and associated revenues. 
• Partnership details, if applicable. 

• Revenue Details: 
• Total sales (excluding GST/HST). 
• GST/HST number (if registered). 
• GST/HST collected during the year. 
• Information about any reserves. 

• Costs and Expenses: 

• Purchases of materials. 
• Wages paid to employees. 
• CPP and EI paid to CRA. 
• Payments to subcontractors. 
• Other production costs. 
• Inventory details. 
• Various other expenses like advertising, meals, bad debts, insurance, professional fees, rent, salaries, property taxes, travel expenses, utilities, and more. 

• Home Business Expenses: 
• Total area of your house and the portion used for business. 
• Expenses related to heat, electricity, insurance, maintenance, mortgage interest, property taxes, and others. 

• Capital Cost Allowance (CCA): 
• Last year’s tax return details. 
• Purchases of equipment, buildings, vehicles, and other assets during the year. 

• Motor Vehicle Expenses: 
• Lease payments, vehicle ownership details, interest on car loans, mileage details, and other associated expenses. 

• New for 2022 – Air Quality Improvement Tax Credit: 

• A refundable tax credit of 25% on eligible expenses for improving air quality or ventilation at the business location. The limit is $10,000 per location or $50,000 for multiple locations. 

Final Notes: It’s essential to gather all the required information in one file or submission. If you’re unsure about any details, it’s always best to consult with professionals or the entity assisting with your tax preparation. Avoid sending raw data or receipts unless specifically asked for bookkeeping services. The information provided here is applicable to common situations, but individual circumstances may vary.