Filing taxes for self-employed business income in Québec

When you run your own business as a sole proprietorship, you must fill in two special tax forms when submitting you income tax return. The Canada Revenue Agency’s form T2125 and Revenu Qubebec’s form tp-80.

The best place to start are the excellent PDF guides offered by the CRA and Revenu Québec: Canada GuideQuebec Guide.

Gross income = Sales – Cost of goods sold

Where cost of goods includes: Opening inventory (raw materials, goods in process, finished goods),  Net purchases (not including the cost of merchandise for personal use), Subcontracting costs, Direct labour costs, and Other costs.

Next, you can add up all the Expenses relating to your business activities:

  • Advertising 
  • Meal and entertainment expenses (1.25%-2% of sales). 
  • Bad debts 
  • Insurance premiums 
  • Interest 
  • Business taxes and licences 
  • Office expenses. (Not including home-office expenses below)
  • Supplies
  • Legal fees
  • Management and administration fees 
  • Rent 
  • Maintenance and repairs 
  • Salaries or wages, benefits and employer contributions. 
  • Property taxes
  • Travel expenses, other than motor-vehicle expenses 
  • Telephone, electricity, heating and water 
  • Fuel and oil 
  • Delivery, freight and messenger services 
  • Motor-vehicle expenses, excluding capital cost allowance. 
  • Deduction respecting incorporeal capital property 
  • Capital cost allowance. 
  • Terminal loss.
  • Other expenses

Additionally, if you work from home, you can claim Home office expenses:

  • Heating
  • Electricity
  • Insurance
  • Maintenance costs
  • Mortgage interest
  • Property taxes
  • Other expenses (e.g. rent)

You’re allowed to claim some percentage $r, 0 \leq r < 1$ of all these amounts proportional ratio of your home that you use for business purpose. Usually $r=0.5$, but it could be more or less depending on how many rooms you use and whether you meet with customers at home.


I’m visiting Amsterdam and I saw this young lady on the ferry who was reading a small book. The young lady was stunningly beautiful but ferries being public transport and all I wasn’t about to chat her up. The tiny book continued to intrigue me though, so I mustered the courage to go talk to her. “This is about the business after all—not a pick up line,” I said to myself.

She turned out to be the nicest girl ever and explained to me this book format is called DWARSLEZER, which roughly translates to cross-reader. She even wrote it down for me—because let’s face it, Dutch is a pretty incomprehensible language for anyone non-Dutch.

It seems the first publisher to use this format is Jongbloed who called it the “dwarsligger” meaning “cross-beam” or “cross-bar”. Other publishers (AW Bruna Uitgevers, Dutch Media en Nieuw Amsterdam) have released books in this format and there might  be some legal action going on.

This format is a great idea because it halves the overall size of “the object you carry” or equivalently we can say it doubles the size of the page you read. Also the book she was reading was 500pp-long but no thicker than 1.5cm, so the “bible paper” helps to make the format compact.

Watch out for a dwarslezer edition of the No bullshit guide to math and physics coming soon!