Expense categories and the T2125

Each expense category matches a line on CRA form T2125, so your year-end totals add up as you go.

If you are a sole proprietor, you report your business income and expenses on form T2125, Statement of Business or Professional Activities, with your personal tax return. Each category in CollabNorth lines up with a T2125 line. The line number is shown next to each category.

Common categories

Category	T2125 line
Materials and goods for resale	8320
Subcontractors	8360
Advertising and marketing	8521
Meals and entertainment	8523
Business insurance	8690
Interest and bank charges	8710
Business taxes, licences and memberships	8760
Office expenses	8810
Office stationery and supplies	8811
Professional fees (legal, accounting)	8860
Rent	8910
Repairs and maintenance	8960
Travel	9200
Phone and utilities	9220
Delivery, freight and courier	9275
Vehicle (gas, insurance, repairs)	9281
Software and subscriptions, Other	9270
Equipment and tools (capital)	9936

Picking the right one

Materials are things you resell or build into a customer's job.
Fuel (not for vehicles) is heating or equipment fuel. Gas for your car or truck goes under Vehicle.
Meals and entertainment are usually only 50% deductible. See Meals and entertainment.

Equipment is different

Computers, tools and machinery you keep for years are capital purchases. You don't deduct them all at once. Instead you claim capital cost allowance (CCA): a share of the cost each year, at a rate set by CRA for each class of property. Line 9936 is where CCA goes.

CollabNorth keeps capital purchases apart in Reports so they don't inflate your expenses. It doesn't work out CCA for you: type your CCA into line 9936 of the T2125 package, which lists the equipment you bought that year to help.

Your totals

Reports shows your profit and loss with expenses grouped by T2125 line. At year end, the T2125 package on Tax time puts them on the form's lines for you. See Your T2125 package.