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mcqp
New Member

As a self-employed writer, for the second year in a row, I'll be reporting a small loss. Is it safe to include my business deductions or could I be challenged?

I did file self-employed as a writer for 4 years at a loss, then didn't claim a loss for 3 years. Gather the rules are stricter about showing profit quickly now?

1 Reply

As a self-employed writer, for the second year in a row, I'll be reporting a small loss. Is it safe to include my business deductions or could I be challenged?

It's difficult to say whether a business loss could trigger a review or not. CRA bases reviews on "Reasonable Expectation of Profit" and if your business does not pass the profit test, all of the claimed business expenses and relevant tax credits would be disallowed. 

They do specify this about writers:

In the case of an artist or writer, it is possible that an individual may not realize a profit during his or her lifetime but still have a reasonable expectation of profit. However, in order to have a reasonable expectation of profit, the artistic or literary endeavor, as the case may be, must be carried on in a manner such that, based on the criteria outlined above, they may be considered to be a commercial activity rather than a hobby.

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/p-176r/application-...