Where do I enter income if I'm not an employee (T4) and don't have a business

Hello,

This is a question asked by many people, in general "How to report net revenue/income from activities?" In general, when not acting as an employee, if you receive compensation for a service you are effectively self-employed. Employees receive income reporting on a T4 issued by the employer. Self-employed generally must self-declare their income, where certain contractor would receive a T4A issued by their payor, and they will claim the expenses they incurred trying to earn that income.  Note, once the T4A is entered into TurboTax Online or Desktop a T2125 Business income statement would be started and can be found in the left menu under Income > Self-Employment, where you will see an existing business in the Business Income summary page in the left hand menu or depending on where you are in the interview process you may have to create a business at the business profile stage. There are some business activities that incur insignificant or no expenses in earning income, where they would simply report the income earned on the T2125 Statement of Business Income. There is a concept of nominal income and expenses where the amounts are small (eg. less than $500), they are infrequent, do not reflect the value of work performed or do not fully compensate for the expenses incurred, and are not part of a business or enterprise, or the intent to start one, for example being paid $50 and/or pizza to help a friend move. Generally, such amounts will not be considered business income and required to be reported.

If you receive compensation for the sale of a good, generally it may be considered a capital gain or loss.  The sale of goods may be considered a business activity depending on several factors including level of expertise, the amount of time dedicated to the activity, the intent of the individual with regard to the activity and the level of income derived from the activity compared to their other sources of income.   For example consider:

• Scenario 1) selling an old grandfather clock not wanted anymore,
• Scenario 2) collecting and selling antiques part-time out of one's home as an income supplement, versus
• Scenario 3) collecting and selling antiques full-time where it represents a significant part of the person's income.

In reviewing these items: 

• Scenario 1) would be considered the sale of 'personal use property' where special rules apply for taxation and if both the adjusted cost base and the proceeds are $1,000 or less then there is no capital gain or reporting required. 
• Scenario 2) would generally be considered a hobby not a business, where there may be capital gains for 'personal use property'. However, with some determining factors the activity may be considered a business, where the sale of those items would be considered income and expenses incurred for the business an expense.
• Scenario 3) would be considered a business.

 For your reference from the CRA:

• T4002 Self-Employed Business …Income https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4002/t4002-1.html
• Personal Use Property https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4037/capital-gains.html#P306_32909