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Returning Member
posted May 20, 2020 3:25:39 PM

Does it matter whether income is entered as "other" vs. "self-employed"

I worked a 2 month contract job and received a daily rate. Can this income be submitted as "other income" or would it be considered as self-employment? Or does it matter? I did not get a T-slip and was paid by the company for any expenses I incurred (ie. fuel and supplies)

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1 Replies
Level 15
May 20, 2020 4:05:46 PM

How you report these earnings depends on how much you earned as Gross Income. If it is less than $3,500, you can report as "Other Employment Income Not on a Slip".  If this income exceeds $3,500 (before expenses) then CRA requires you to complete a T2125 - Statement of Business Activities.  A Hobby business would not be considered as self-employment.

Business income includes income from any activity you carry out for profit or with reasonable expectation of profit. A business includes:

  • a profession;
  • a calling;
  • a trade;
  • a manufacture;
  • an undertaking of any kind; and
  • an adventure or concern in the nature of trade.

You can choose to include your expenses by completing the Self-Employment section of TurboTax. If your business expenses exceeded your income, you will have a business loss. This is a Non-Capital Loss and can be applied to other types of income (or carried forward if you didn't have any other income in 2018).

Note that you cannot continue to write off business expenses against personal income year after year for many years. The expectation is that your business "has a reasonable expectation of profit", according to the Canada Revenue Agency (CRA), and therefore will eventually generate more income, reduce losses, and become profitable.  If the CRA decides that this is not the case they can not only deny your claim for business losses in the current year but re-assess your claims for losses in previous years.