Freelance brought in no income for the second year running. Are there tax ramifications to continuing to file losses (i claimed my computer & email/url costs last year)

[eaglegrl]

I have been using the small business version, but want to know if suddenly switching back to the basic filing will raise any red flags. I was not claiming any space in my apt or costs regarding internet, electricity etc.

[TurboTaxKim]

• You can choose to use whichever version of TurboTax to prepare your taxes. Changing to a different version will not raise any red flags with CRA, as all versions contain the same CRA certified forms.

• In regards to continuing to claim a loss in your business, CRA does have rules surrounding this, and you could be denied any losses you claim now, (and possibly ones made in prior years). 

Continuously claiming expenses against little or no income resulting in a loss, may eventually "raise a red flag". Especially if your business has some "personal element" to it, such as a home based business that could be considered a hobby.

Sometimes activities are both personal and business-oriented. You can turn hobbies into businesses or run part-time businesses on the side or out of your home. If there's an expectation of profit, the CRA considers you a business. If questioned about your continous losses, you would then have to prove you did have an expectation of profit and were making efforts to make your business profitable or succeed.

Here's some more information from TurboTax:

https://turbotax.intuit.ca/tips/what-is-a-business-for-tax-purposes-6180