Revenue
Include all of your revenue for the year but be careful not to double count your income.
In some cases, clients will send you a T4A slip to report the amount they’ve paid. If you have already recorded the income in your records, you are in danger of paying tax on the income twice—once when you report the T4A and again when you total the income from your books.
If you are a self-employed salesperson and have won a contest related to your selling activity, you will need to include in your income the value of the prize.
Expenses
If you are self-employed, you are allowed to deduct expenses incurred to earn income. These expenses typically include a home office (where no other office exists), transportation (with specific rules for allowable automobile deductions) and entertainment (you are allowed a 50% claim).
You can also deduct expenses for travel, advertising in Canadian media, salaries and some benefits. Receipts are needed for all of the expenses claimed and these should be kept for six years. Spouses and children can be paid a salary provided that it is for legitimate work and the amount is reasonable for the tasks performed. Invoices should be prepared and payments must be made.
Business Expenses Include:
Utilities
Repairs and maintenance
Telephone and Internet
Supplies
Insurance
Rent or property taxes and mortgage interest
Automobile Expenses Include:
License and registration fees
Insurance
Maintenance and repair
Fuel, oil and lubricants
Washes
Parking fees
Capital cost allowance
Lease payments
