# Extra Income?



## Unwin171 (May 25, 2012)

Hi all,

I work a full time job grossing about 30k a year. This summer i expect to make about 20k in sales from various carpentry projects I've been making in my garage. I am not a registered business and i am not collecting hst from my customers since I'm making under 30k a year. My main question is how do i calculate how much extra income to claim? I would obviously subtract all the material costs that went into my projects but can i also subtract the cost of any other expenses that are directly related to the projects(tools, electric bills, advertising, partial rent/vehicle costs,insurance etc). 

Any advice would be greatly appreciated.


----------



## Homerhomer (Oct 18, 2010)

You can deduct any expenses related to the business, however in some cases you need to determine if it's expense or capital asset. For example if you spend $2,000 on some carpentry equipment you won't be able to write off $2,000 in the year but you will set it up as class 8 capital asset and amortize 20% each year.

Have a read.

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/rprtng/menu-eng.html


----------



## MoneyGal (Apr 24, 2009)

Take a look at the T2125 form on the CRA website -- here's a link:

http://www.cra-arc.gc.ca/E/pbg/tf/t2125/

This form will show you all the categories of expense you can claim. Homerhomer's advice is also good - you will claim both "full" costs (as in, you put the full amount of the expense in your tax return for that year) and capital costs (you put a portion of the cost in your expenses on your tax return for the year). 

But if you look at the categories on that form, you will get a good sense of the kinds of expenses you can claim. Professional advice is probably good, at least in the first year, but you could make it as simple as adding up your expenses at the end of the year and writing them in the correct spot on your T2125 form. 

Best of luck!


----------



## Unwin171 (May 25, 2012)

Thanks guys,
Another thing I just thought of was if I make 30k at my full time day job and an additional 5-10 k as extra income from woodworking, does this mean i have to collect hst on the extra income because I'm making a total of over 30k a year?


----------



## Homerhomer (Oct 18, 2010)

Unwin171 said:


> Thanks guys,
> Another thing I just thought of was if I make 30k at my full time day job and an additional 5-10 k as extra income from woodworking, does this mean i have to collect hst on the extra income because I'm making a total of over 30k a year?


No, you don't have to register for hst until the revenues from your business exceed 30K per year, employment income doesn't count, however I would say it is beneficial to register for hst and collect since everyone is expecting to pay hst, and you can claim back the hst paid on purchases, it increases your profit.

For example if you don't register you have sales of $1,000 and expenses of $113 (including hst), your profit is $887, if you register you would have revenues of $1,000 (plus you charge hst of $130), your expenses are $100, so your profit is $900, and you file hst for the net of hst collected less hst paid on purchases ($130 - $13 +$117).


----------



## Unwin171 (May 25, 2012)

Again thanks for the prompt and informative response, I've been worrying non stop the past few days about that.

One more thing, do I have to be a registered business in order to register for hst?

Thanks again


----------



## Homerhomer (Oct 18, 2010)

Unwin171 said:


> One more thing, do I have to be a registered business in order to register for hst?
> 
> Thanks again


You need to register for business number, when you do so you will also request GST account, the business number registration can be done under your own name, it doesn't have to be a business name.

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/bn-ne/menu-eng.html


----------

