CRA Form T2125 – Statement of Business or Professional Activities

What Is the CRA Form T2125?

The T2125 is a key document for anyone earning self-employment income in Canada. Whether you are a freelancer, consultant, independent contractor, or professional, this form helps you accurately report your business or professional income and claim eligible deductions as part of your annual T1 tax return.

Each business or profession you operate requires its own separate form. It captures your accounting method (cash or accrual), gross income, GST/HST adjustments, and all eligible business expenses. The form also includes dedicated sections for internet business activities, capital asset purchases, and business-use-of-home expenses. Commission agents, farmers, and fishers use related CRA forms for their specific income types, but this form covers the broadest range of self-employment situations for Canadian tax filers.

Self-employed Canadians must attach all completed T2125 forms to their T1 General return. The net income calculated on each T2125 transfers directly to the applicable lines of the T1, where it contributes to total income and self-employment earnings subject to Canada Pension Plan (CPP) contributions. Self-employed individuals pay both the employee and employer share of CPP on net self-employment income above the basic exemption, calculated on Schedule 8 of the T1 return. You can then claim half of those CPP contributions as a non-refundable tax credit that reduces your federal and provincial taxes.

By completing the T2125 accurately, you can claim all allowable deductions, calculate your net income before and after adjustments, and fully comply with Canada Revenue Agency requirements. Keeping organized records throughout the year makes filing straightforward and ensures you claim every deduction you are entitled to.