# Tax question I cannot seem to get a clear answer for



## robot5555 (Dec 9, 2014)

Hi all, I am new here = )

I am a Senior graphic designer and make 68k a year, and I file my taxes normally as a gov employee. However I also make extra money as a designer and artist on the side under my own name, not registered business. I do charge gst on projects because my clients ask for receipts, I did make a little under 10k, and I do have an office in my house and materials/expenses that I could claim such as computer and art materials.

Would this be under line 104? Is there anything I should be worried about?

AS


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## Guban (Jul 5, 2011)

Welcome robot!

You should file a business return.
http://www.cra-arc.gc.ca/E/pbg/tf/t2125/t2125-13e.pdf

The resulting income appears on 162 and 135 not on line 104!

There's potentially lots to worry about. You may wish to read up on what you can deduct, and what you can't. Oh yes, if you have a large net income (I don't know what your expenses are), you also may have to worry about a large tax bill!


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## robot5555 (Dec 9, 2014)

Guban said:


> Welcome robot!
> 
> You should file a business return.
> http://www.cra-arc.gc.ca/E/pbg/tf/t2125/t2125-13e.pdf
> ...


= ( thanks


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## domelight (Oct 12, 2012)

Guban said:


> Welcome robot!
> 
> You should file a business return.
> http://www.cra-arc.gc.ca/E/pbg/tf/t2125/t2125-13e.pdf
> ...



The difference is the t2125 will calculate CPP on self employed earnings. (9.9% of business profit)
Line 104 will not.
However Cra always reviews line 104. and you will almost with a certainty receive an inquiry from CRA as to the nature of the income and you will be reassessed for not remitting the CPP.
The inquiry may be right away or two years later, but they will ask at some point.


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## My Own Advisor (Sep 24, 2012)

You do not need to submit/contribute to CPP as a small business over if you are already contributing the max to CPP, as a gov't employee.

Start following T2125.


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## kcowan (Jul 1, 2010)

Don't ignore GST input credits. They can add up for a tiny business that needs a lot of technology at startup.


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## domelight (Oct 12, 2012)

kcowan said:


> Don't ignore GST input credits. They can add up for a tiny business that needs a lot of technology at startup.


 He may also be a candidate for filing hst on the quick method. Many people seem to overlook this option still exists.


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## Retired Peasant (Apr 22, 2013)

You haven't registered your business, and you make only $10000 from it, yet you charge GST. You don't need to charge GST given the revenue level. In addition, to file the GST return, you'd have to get a business number. Sounds like you add GST to your invoices, but just pocket the $$?

T2125 is what you want to file.

Although you can deduct x% of your household utilities (x being the % of your home used for business), I wouldn't bother. You have to be careful to keep that portion of your home strictly for business, and furthermore that portion of your home is now subject to capital gains when you sell. For the amount of $$ you're making, KISS.


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## Guban (Jul 5, 2011)

Retired Peasant said:


> Although you can deduct x% of your household utilities (x being the % of your home used for business), I wouldn't bother. You have to be careful to keep that portion of your home strictly for business, and furthermore that portion of your home is now subject to *capital gains *when you sell. For the amount of $$ you're making, KISS.


You shouldn't have to worry about capital gains on the home office, so long as you don't depreciate that part of the house.


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## fraser (May 15, 2010)

You need to watch line 104. CRA does audits on these to determine the source. Actually, these audits have been initiated by the CPP folks. 

My daughter was desk audited on this two years ago. I asked our accountant and she confirmed that this is a common desk audit driven by the CPP folks. They are looking for that 9.9 percent.


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