What Counts as Business Income in Canada?
- Natesh Pillai
- Jun 26
- 1 min read
Running your own venture? It's essential to understand how the Canada Revenue Agency (CRA) defines your earnings. When it comes to self-employment, your income falls under the category of "business income."
What is Business Income?
Simply put, business income includes any money you earn from an activity that you carry out for profit, or with a reasonable expectation of profit. This covers a broad spectrum of activities where you are working for yourself, rather than as an employee.
This can include income from:
A Business: Any commercial operation you run.
A Profession: If you're a doctor, lawyer, accountant, or other certified professional operating your own practice.
A Calling: Such as an artist, speaker, or musician.
A Trade: Like a carpenter, electrician, or plumber working independently.
A Manufacture: If you're producing goods for sale.
An Undertaking of Any Kind: A general term that captures various independent ventures.
An Adventure or Concern in the Nature of Trade: This covers short-term, profit-seeking activities that might not be a continuous business.
Commission Income: Earnings based on sales or transactions, common for real estate agents or sales representatives.
Farming or Fishing: Income derived directly from these activities.
Key Distinction: Business vs. Employment Income
It's crucial to differentiate business income from employment income. If you receive a T4 slip from an employer, that's employment income, and it's treated differently for tax purposes. Business income is what you earn when you are self-employed, providing goods or services independently.
Understanding this definition is the first step in accurately reporting your earnings and managing your tax obligations as a self-employed individual or business owner in Canada.
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