# self employed income



## riamo (Jun 18, 2009)

Hello,

I am self-employed I recently got a cheque for services rendered. Do I have to declare this as income as 2010 or can I wait to deposit the cheque next year in 2011 and declare it as income for 2011 when I expect to be in a lower tax bracket?

Thanks!


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## OhGreatGuru (May 24, 2009)

riamo said:


> Hello,
> 
> I am self-employed I recently got a cheque for services rendered. Do I have to declare this as income as 2010 or can I wait to deposit the cheque next year in 2011 and declare it as income for 2011 when I expect to be in a lower tax bracket?
> 
> Thanks!


Read CRA Guide T4002. Unless you are a commission sales person, you generally have to report income on an accrual basis. So you have to report this income for 2010.


_Chapter 1 – General Information

*Accrual method*
In most cases, as a self-employed individual, you report business income by using the accrual method of accounting. With this method, you:
■ report your income in the fiscal period you earn it, regardless of when you receive the income; and
■ deduct expenses in the fiscal period you incur them, whether you paid them in that period or not.
...

*Cash method*
If you are a self-employed commission salesperson, you can use the cash method of reporting your income and expenses, as long as it accurately shows your income for the year.

Under this method, you:
■ report income in the year you receive it; and
■ deduct expenses in the year you pay them._


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## Farly (Aug 18, 2009)

OhGreatGuru said:


> Read CRA Guide T4002. Unless you are a commission sales person, you generally have to report income on an accrual basis. So you have to report this income for 2010.
> 
> 
> _Chapter 1 – General Information
> ...


Since the income was received in 2010, there is no choice but to report it in 2010. There would only be a difference for the cash method if the income was earned in 2010, but *received in 2011.*


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## OhGreatGuru (May 24, 2009)

Farly said:


> Since the income was received in 2010, there is no choice but to report it in 2010. There would only be a difference for the cash method if the income was earned in 2010, but *received in 2011.*


Quite right. But OP seemed to be posing the existential quesion: has he actually "received" payment before it is deposited in the bank? I believe the answer is yes. At any rate the CRA rule makes it moot (and serves the purpose of preventing people from gaming the system by deliberately delaying deposits) .


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## sprocket1200 (Aug 21, 2009)

um, just check the date on the cheque...


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## marina628 (Dec 14, 2010)

I am self employed and any invoices we generate in quick books , even if payment is not processed goes in the tax year that is on the invoice.So it is 2010 income.We hosted an event at a Toronto hotel just 4 weeks before our year end.We wanted to write it off in Sept 2010 year end but the hotel dragged it's feet and didn't invoice us until 5 weeks after invent.It was $27,000 but we have account with them so didn't give us the bill immediately.They have a policy where they give corporate clients 30 days grace so we missed it by about 3 days.Next year we will have it in July instead of August !


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