Form T2125, Statement of Business or Professional Activities, is used with an individual income-tax return to report business or professional income and expenses. It is an income-tax form. It is not a GST/HST return and it does not create or cancel a GST/HST account. CRA: report business income and expenses
Organize the records before entering amounts
Use the form and instructions for the tax year being filed. Gather income records, invoices, expense receipts, and the information needed to separate business and personal use. CRA says only the business portion of an expense belongs on T2125; personal expenses cannot be deducted there. CRA: T2125 expenses section
A useful working sequence is:
- Identify the activity and its income for the tax year.
- Separate current business expenses from personal amounts and capital-property purchases.
- Keep the receipts, invoices, books, and other records that support the entries.
- Use CRA instructions for special categories such as inventory, motor-vehicle use, home workspace, or capital cost allowance when they apply.
Keep GST/HST separate from income-tax reporting
If you are registered for GST/HST, reconcile the books used for T2125 with your GST/HST records, but do not treat the forms as interchangeable. GST/HST collected and net tax are reported through the GST/HST account and return. An input tax credit (ITC) is subject to the GST/HST rules.
CRA gives a specific income-tax treatment for an expense where an ITC is claimed: reduce the business-expense amount reported on T2125 by the ITC claimed. This prevents the same GST/HST amount from being counted both as an ITC and as an income-tax expense. The treatment still depends on the facts and eligibility of the claim. CRA: expenses and ITCs on T2125
Example: A registrant buys a business supply for $105, including $5 GST, and is eligible to claim the $5 as an ITC. The T2125 expense is generally based on the $100 cost after the claimed ITC, subject to the applicable income-tax rules. This example does not establish that an ITC is available.
Find the official form and the right next guide
Get the current T2125 and instructions from CRA’s business-income pages or the tax package for the return year. If you need to assess GST/HST registration, use GST/HST registration guidance; if you already have an account and need to file, use GST/HST filing guidance. The two systems use related books and invoices, but have different returns, deadlines, and eligibility rules.