How to report freelance income | Income tax filing | Discussion forum

Winnie said
Doing my taxes right now, need some help with income allocation.

Many very knowledgeable people here, much better chances to get just right answer instead of calling CRA (they usually provide around 40% correct answers) and waiting a few hours on hold.

I helped 2 American citizens to apply and receive Canadian work permits. They paid me $600 USD. I should report that amount in CAD, that is easy part, but not sure on which line exactly on T1 form?

Line 10400 – Other employment income (Foreign employment income)
Line 13000 – Other income
Line 13700 - Self-employment income (Professional income)

If anyone knows the right answer, please help me. Thank you!  

I am not CPA, so take what I say correspondingly, but if faced with similar type of income, the following would be my approach.

This is not defined as foreign employment income, so it can't be line 10400. Foreign employment income is income earned outside Canada from a foreign employer.

I am assuming you are not in the regular business of helping Americans to acquire Canadian work permits, nor you plan to have business expense deductions associated with that income.
Then, I would choose "Other Income" to report that, because for "Professional Income" you might also have to file form T2125, statement of business activities.

So, my answer is: Line 13000 "Other Income."

I don't have any expertise on this except for having been a small business owner, but I'm pretty sure it's not Foreign Income because you did not work in a foreign country.

I believe you can call it self-employment as you did make a profit. That is the main criterion from CRA point of view, i.e. whether you made a profit or had a reasonable expectation of making one in due course by developing your business. The main advantage of using this line is that you can deduct any expenses you may have incurred. It's not about what type of business you were in. it doesn't have to be a profession or even your usual occupation, just the profit motive. You could have been paid for mowing lawns, shovelling snow, or walking dogs, and that would still be a business - you can deduct the shovel or lawn mower.
However, if you have no intention of continuing with this "business" AND you did not have a net profit after expenses, then I wouldn't use this category as it is likely to generate curiosity from CRA. A business can generate foreign income.

"Other income" is really for income that is neither from an employer nor with a view to profit over expenses, such as bursaries etc.

If you had no expenses to deduct, I don't think it matters much whether you use self-employment or "other". I expect the main thing they want is that you declare it!

If it were me, I'd call it self-employment. You provided a service for a fee, for which the client paid you directly.

Winnie, line 13500 is for self-employment - business income, line 13700 is for self employment - professional income, so if what you did falls into a "profession" then 13700 is the right line.

I'm pretty sure it won't matter either way, main thing is you report it, they won't quibble about what line it went on.

Norman1, Bill, I agree, it will be Line 13500 - Self-employment income (Business income), not professional income.

Before I looked at SimpleTax Help: The main difference between business and professional income is that businesses have inventory and sales, while professionals have work-in-progress and charge fees.

https://help.simpletax.ca/questions/business-professional-income

I was thinking about something like "immigration consulting".
I received fees and had no inventory and sales.
But, I'm unregistered and not practicing a regulated profession.

Toronto law firm Kalfa Law explained very well, no more misunderstanding. Thank you everyone!

I've used "self-employment income" for about twenty years with no hiccups from CRA. And, as has been noted, in a couple of years where I had other income and a loss from self-employment, that loss reduced my taxable other income.
RetirEd