What Is Line 13500 on the Canada Income Tax Return?
If you were self-employed during the previous calendar year, the Canada Revenue Agency (CRA) requires that you report the business income you earned on line 13500 of the T1 General Tax Return. Business income is not the same as employment income, which employees report on line 10100. But what should you include as business income, and where is line 13500 located on the T1 General? Let’s take a closer look.
What Is Line 13500?
Line 13500 is where self-employed Canadians report their business income on their tax return. According to the CRA, business income “is income you earn from a profession, a trade, a manufacture or undertaking of any kind, an adventure or concern in the nature of trade, or any other activity you carry on for-profit, and there is evidence to support that intention.”
What Happened to Line 135?
Line 13500 changed from 135 after the CRA added several zeros to the T1 General form. For example, line 10100 (Employment Income) was formerly line 101.
Where Is Line 13500 Located on My Tax Return?
You’ll find line 13500 in the Total Income portion of the T1 general, where all income sources are reported. It’s on the second page of your return, about three-quarters down the page.
Not all self-employment income is captured on line 13500. The CRA has given some unique business types their own specific line. For example, farming income is reported on line 14100 and fishing income on line 14300. There are also separate professional and commission income lines, on lines 13700 and 13900, respectively. All self-employment income is reported between line 13500 and line 14300
Reporting Gross vs. Net Business Income
Reporting self-employment income is not as simple as recording the total money you earned during the year. Sole proprietors and other business owners can deduct eligible business expenses to pay less income tax.
You’ll need to report your gross income before deductions and your net income, calculated for tax purposes. But calculating self-employment income deductions can be complicated due to the number of expenses you can write off and the CRA’s different methodologies to deduct various expenses.
To determine the amount you will report on Line 13500, you must first fill out a Statement of Business Activities Form (T2125). This is where you will claim any applicable expenses, such as using your vehicle for business purposes, home office use, business purchases, etc.
Once you complete the T2125 to determine your net income for business purposes, you will report it on line 13500. There will also be a place to report your gross income.
The Bottom “Line” on 13500
If you’re reporting self-employment income on your tax return for the first time, the process can seem complicated. Perhaps you’ve never had to report an amount on line 13500 or fill out a T2125 Statement of Business Activities before. The good news is that online tax return software programs like TurboTax and Wealthsimple Tax are designed to handle self-employment income and guide you through filing your taxes.
If you still have questions, I recommend seeking professional advice from an accountant or other licensed tax preparer who will be well equipped to answer any further questions.
