What is Form T2125 and what does it cover?

Form T2125 (Statement of Business or Professional Activities) is the CRA form that self-employed Canadians use to report their business income and expenses. It must be filed with your T1 Return if you have self-employment income. The form is divided into sections: **Part 1 — Identification**: Business name, address, and main product or service **Part 2 — Business income**: Total gross revenues from your business **Part 3A — Cost of goods sold**: For product-based businesses (not usually needed for service providers) **Part 4 — Business expenses**: All deductible expenses including advertising, vehicle costs, office expenses, professional fees, rent, telephone, utilities, home office costs, CCA (capital cost allowance for equipment), etc. **Part 6 — Business-use-of-home expenses**: Detailed calculation for home office claims **Part 7 — Capital cost allowance (CCA)**: Claiming depreciation on business equipment and vehicles If you run more than one business, you complete a separate T2125 for each business. Professional activities (lawyers, accountants, engineers, etc.) also use T2125 and can elect to use the professional income rules.

  • T2125 is mandatory for all self-employed income — filed with T1 Return
  • Reports gross business income, cost of goods sold, and all deductions
  • Includes home office calculation (Part 6) and CCA claims (Part 7)
  • One T2125 per business — multiple businesses need multiple forms
  • Available from the CRA website or pre-loaded in NETFILE software

Related Questions

  • What is a T1 Return and how do self-employed Canadians file it?
  • What business expenses can self-employed Canadians deduct?
  • How do I claim home office expenses in Canada?
  • What is Capital Cost Allowance (CCA) and how do I claim it?