Formerly known as Line 135, Line 13500 all the way to 14300 relate specifically to self-employed.
Starting up your own business is an exciting venture – until the time for taxes come. When you own your own business, there is an entire section of your Tax Return that you are required to fill out. While others get to skip this portion, anyone with their own business must not skip these lines. More specifically, we are referring to lines 13500 to 143000.
What qualifies as self-employed?
Not sure if the government considers you self-employed? In Canada, you must fill out Line 13500 to Line 14300 if you own or operate your own business or profession, earn commissions, or if you are involved in farming or fishing.
More specifically, the Canadian Revenue Agency considers you as earning a business income if you are involved in any ventures, trades, or undertakings that you carry out with the expectation of earning a profit.
When determining whether or not you need to fill in the self-employment section of your Tax Returns, it’s important to note that you do not need to be earning a profit to be considered self-employed. The “expectation of profit” is what matters.
This means that even those who are just starting out in personal business are still required to file it on their taxes.
What is Line 13500 on Tax Return?
When filling out your taxes, line 13500 refers to your business income. This is any 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”. Source: https://www.canada.ca/en/revenue-agency
It’s important to note that your Business Income is not the same as your Employment Income. Business income is considered in relation to self-employment, while Employment Income refers to wages earned from an employer.
Do I have to Provide Documents to Support my Business Income?
Yes. Business owners are required to submit documents and files that support their income statement. There are several forms that you can use to do this, depending on what type of business you own. You can also support your income statement with things like invoices, receipts, register tapes, contracts, and fee statements.
What Happens if I Don’t Report My Business?
If you fail to report your business income to the Canadian Revenue Agency, you might expect penalties. Penalties can range anywhere from 10% to 50% of the amount you failed to report.
Being upfront and honest is your best chance at avoiding such penalties. Sometimes, with honesty and voluntary reporting of omittance, penalties can be waived.
If you own or operate your own business, or make money through methods other than an employer, you are required to fill out Lines 13500 to 14300 on your income tax forms (formerly lines 135-143). Failing to do so could result in severe penalties.