The Complete T2125 Guide for Canadian Service Businesses (2026)

T2125 — the Statement of Business or Professional Activities — is the CRA form that reports your self-employment income and expenses. Every self-employed Canadian files one attached to their T1 personal return. Here is a plain-language guide to getting it right in 2026.

What T2125 actually is

T2125 is where you tell CRA: here is what I earned from my business, and here are the expenses I am deducting against it. The result is your net business income, which flows onto Line 13499 (business income) or Line 13699 (professional income) of your T1, and from there into your overall taxable income.

You file one T2125 per business activity. If you do both graphic design and photography under different business names, you may need two T2125 forms. If it's all one business, one form covers it.

The most important line numbers

Income section

• 8000 — Gross business or professional income (total before any deductions)
• 8230 — Other income (grants, government assistance, etc.)

Expense section — what goes where

• 8810 — Office expenses: paper, printer cartridges, pens, small supplies
• 8811 — Office expenses — computer and internet: software subscriptions, cloud tools, domain registrations
• 8860 — Legal, accounting, and professional fees: lawyer, accountant, business advisor
• 8871 — Meals and entertainment: 50% of business meals (CRA caps deductibility at 50%)
• 9060 — Salaries and wages paid to others (if you hired subcontractors)
• 9200 — Travel: flights, hotels, taxis for business travel
• 9220 — Telephone and utilities: business phone, internet bill
• 9270 — Advertising: paid ads, website, marketing materials
• 9281 — Motor vehicle expenses: fuel, maintenance, insurance — you deduct the business-use percentage
• 9270 — Capital cost allowance (CCA): depreciation on equipment, computers, cameras

Home office deduction

If you work from home, you can deduct the business-use portion of your home expenses. The simplest method: divide the square footage of your office by the total square footage of your home. That percentage applies to rent (or mortgage interest), heat, electricity, internet, and home insurance. For example, if your office is 10% of your home, you deduct 10% of those costs.

The deduction cannot create a business loss — it can only reduce income to zero. Any unused home office expenses carry forward to the next year.

Motor vehicle expenses

Keep a mileage log. CRA allows $0.70/km for the first 5,000 km and$0.64/km thereafter (2024 rates) under the simplified method. Alternatively, you can claim actual vehicle expenses (gas, insurance, maintenance, depreciation) at the business-use percentage based on your log. The actual method often yields a higher deduction but requires more record-keeping.

GST/HST and T2125: the relationship

Your gross income on Line 8000 is your revenue excluding GST/HST. The HST you collected is not your income — it belongs to CRA and gets remitted separately. Similarly, the HST you paid on business expenses (ITCs) reduces what you owe to CRA, but those expenses are still deducted at their pre-tax amount on T2125.

Common mistakes to avoid

• Claiming 100% of meal costs: CRA allows 50% of business meals, not 100%.
• Deducting personal expenses: If your phone is 60% personal, only 40% is deductible. CRA expects you to be honest about the split.
• Forgetting capital cost allowance: A $3,000 laptop cannot be fully expensed in the year of purchase — it depreciates over several years via CCA Class 10 (55% declining balance) or Class 50 (55%) for computers.
• Missing the home office carry-forward: Unused home office expenses from prior years can be applied this year. Keep your old returns.
• Not keeping receipts: CRA audits T2125 claims regularly. Every deduction requires documentation.

How SoloDeck maps your expenses to T2125

When you add an expense in SoloDeck — whether entered manually or by scanning a receipt — you select the business category. SoloDeck tracks which CRA line each category maps to and pre-populates your T2125 when you export it at tax time. You still review the numbers, but the line-by-line mapping is done for you.

Frequently asked questions

When is T2125 due?

It's attached to your T1 personal return. The filing deadline for self-employed individuals is June 15 (extended from April 30), but any taxes owing must be paid by April 30 to avoid interest. File by April 30 if you owe money; file by June 15 otherwise.

Do I need an accountant to file T2125?

Not necessarily. The form is straightforward if your business is simple (service income, standard expenses, no employees). A good tracking system — one that maps expenses to CRA line numbers throughout the year — makes self-filing manageable. An accountant adds value if you have complex CCA schedules, multiple business activities, or large unverified deductions.

What is a reasonable deduction for a home office?

CRA expects the percentage to reflect actual business use of the space. A dedicated room used exclusively for business 100% qualifies. A dining room table used occasionally does not. A room used for both personal and business purposes requires a proportional estimate.