Why read this?

Your clients are:

  • › unemployed or underemployed; or
  • › part of the sharing economy.

What to do

Report employment income

  • Report your client’s income on Line 101 of your client’s return.
  • If your client earns tips, or cash for occasional jobs, report these on Line 104 of the return.
    • ›› If your client has income on Line 104, she’s eligible for the Canada Employment Amount on Line 363 of Schedule 1, Federal Tax.
    • ›› Claim the lesser of: $1,127, or the total of the income reported on Lines 101 and 104.

If your client has other sources of employment income, some of her EI benefits may be clawed back, says accountant Colleen Gibb, partner at Gibb Widdis in Ancaster, Ont.

Report employment insurance

Report the amount from Box 14 of your client’s T4E: Statement of Employment Insurance Benefits, minus any money in Box 18, on Line 119 of the return.

Deduct interest paid on student loans

Your client can claim interest paid on her student loan in the tax year, or the preceding five
years if the loan was made under the Canada Student Loans Act, the Canada Student Financial Assistance Act or a similar provincial or territorial program.

  • Enter the interest paid on Line 319 of Schedule 1.
  • Claim the equivalent provincial or territorial tax credit on Line 5852 of the provincial form.
  • If filing a paper return, attach supporting documents showing the interest amounts paid.

Interest paid on a personal loan, line of credit, a student loan that’s combined with another loan or a foreign student loan is not deductible.

Report ANY sharing economy income

Income from your client’s online businesses must be included in her income.

Your client operates an online store

Report income on Form T2125: Statement of Business or Professional Activities. Under Internet Business Activities, list the site’s URL.

  • In Part 1, calculate GST/HST if your client has more than $30,000 in revenue, or has a GST/HST account.
  • In Part 3, calculate gross income, and enter the total on Line 8299 of Form T2125 on Line 162 of the return.
  • In Part 4, subtract inventory and other costs from gross income.
  • In Part 5, deduct business expenses (See “Online business expenses”)
  • If your client runs a business out of her home, calculate related expenses in Part 8 and enter the total in Part 6.
  • Enter the total from Line 9946 of Part 6 on Line 135 of the return.
    • If your client only provides space and basic services, such as utilities, laundry facilities or parking, then CRA considers it to be property income.
      • Complete Form T776: Statement of Real Estate Rentals to calculate income and expenses.
      • List your client’s gross income, from Line 8299 of T776, on Line 160 of the return.
      • List your client’s net income, from Line 9946 of T776, on Line 126 of the return.
    • If your client provides additional services, such as cleaning or meals to her renters, then CRA says the income is from a business.
      • Follow the procedures for income from an online store (to the left).
  • Your client lists her house on a home-sharing service

    Determine whether your client’s income is considered business or property income under CRA rules.

Online business expenses

If your client operates an online store, she may have some of these claimable expenses:

  • Advertising
  • Supplies
  • Professional fees
  • Telephone and utilities
  • Delivery, freight and express mail
  • Vehicle expenses, such as gas and maintenance

If your client rents her home on a home-sharing site, she may have some of these claimable expenses:

  • Advertising
  • Insurance
  • Supplies
  • Professional fees
  • Rent or property tax
  • Maintenance and repairs
  • Telephone and utilities
  • Delivery, freight and express mail
  • Vehicle expenses, such as gas and maintenance

Rent, property tax and home sharing

Your client can deduct a portion of the rent or property tax she pays on a home she rents out through a home-sharing website as a business expense, says accountant Colleen Gibb. The amount must be pro-rated to reflect the business use of the home. If it’s business income, she would use Lines 8910 or 9180 of Form T2125. If it’s rental income, she would use Line 9180 or 9270 of Form T776.

Example: If your client pays $4,000 a year in property tax and rents out her home for 60 days a year, she can claim 60 days worth of tax (i.e., $4,000 divided by 365 = $10.96 a day. $10.96 a day multiplied by 60 days is $657.54).

Sources: Colleen Gibb, FCPA, FCA, Partner,Gibb Widdis, Ancaster, Ont.; CRA