Guide T4002 and Form T2125 for self-employed taxes

Published Tuesday 21 April 2026

Table of contents

• What is Guide T4002?
• Who should use Guide T4002?
• How to access Guide T4002
• What the T4002 covers
• A closer look at the details
• FAQs on Guide T4002

Key takeaways

• Download Guide T4002 from the CRA website to access step-by-step instructions for reporting self-employment income, whether you're a sole proprietor, commission salesperson, farmer, fisher, or partnership member.
• Complete Form T2125 using the chapter-by-chapter guidance in Guide T4002, which covers income reporting, expense deductions, capital cost allowance, and loss reporting for your specific business type.
• Claim all eligible business expenses throughout the year, including home office costs, vehicle expenses, professional fees, and equipment depreciation, to reduce your taxable income as much as possible.
• Register for GST/HST once your business revenue exceeds $30,000 in any calendar quarter or year, and use accounting software to track income and expenses in real time to make tax filing easier.

Key takeaways

• Download Guide T4002 from the CRA website to access comprehensive instructions for reporting self-employment income, including specific guidance for sole proprietors, partners, commission salespeople, farmers, and fishers.
• Complete Form T2125 using the detailed chapter-by-chapter instructions in Guide T4002, which covers income reporting, expense deductions, capital cost allowance, and loss reporting for different business types.
• Maintain organized records throughout the year and claim all eligible business expenses such as home office costs, vehicle expenses, professional fees, and equipment depreciation to maximize your tax deductions.
• Register for GST/HST when your business revenue exceeds $30,000 in any calendar quarter or year, and consider using accounting software to track income and expenses in real time for easier tax preparation.

What is Guide T4002?

Guide T4002 is the Canada Revenue Agency's (CRA) official tax guide for self-employed Canadians. Officially called T4002 Self-employed Business, Professional, Commission, Farming, and Fishing Income, it helps you report self-employment income and complete your business taxes accurately. The CRA updates this guide regularly to reflect current tax rules.

Who should use Guide T4002?

Guide T4002 is designed for self-employed individuals in Canada who run unincorporated businesses. You should use this guide if you're a:

• Sole proprietor: Self-employed person running a business or professional practice
• Commission salesperson: Earning income through sales commissions
• Home daycare provider: Providing childcare services in your home
• Farmer or fisher: Operating farming or fishing operations
• Partnership member: Partner in a business, professional, farming, or fishing partnership

The guide helps you navigate the specifics of reporting income and expenses for these types of self-employment activities.

How to access Guide T4002

Download the most current version of Guide T4002 from the Government of Canada website at any time. You can view it online or save the PDF to print for your records.

What the T4002 covers

Guide T4002 contains six main chapters that cover everything you need to report self-employment income:

• General information: record keeping, deadlines, and basic requirements
• Income reporting: instructions for completing tax forms for different business types
• Expense deductions: eligible business costs you can claim
• Capital cost allowance: depreciation rules for business assets
• Loss reporting: guidance on handling business losses
• Capital gains: special rules for farmers and fishers

The guide also includes definitions and specific information for professional services, farming, and fishing operations.

A closer look at the details

Guide T4002 breaks down each step of filing your business income tax return. Here's what each chapter covers and how it applies to your situation.

Chapter 1: General information

Chapter 1 covers the fundamentals you need to get started with business tax reporting:

• Business qualification: activities that count as a business for tax purposes
• Income recognition: methods for identifying and reporting different types of business income
• Modern assets: reporting requirements for gift cards, certificates, and crypto-assets
• Record keeping: documents you must maintain and how to organize them
• Key deadlines: filing dates, installment payments, and balance owing dates

Chapter 1 explains what activities count towards farming income and clarifies what doesn't qualify, such as raising animals to be sold as pets. It also covers when you must begin reporting your income and deducting expenses.

This chapter addresses these essential tax requirements:

• Accounting methods: guidance on who can use cash method versus accrual method reporting
• Installment payments: requirements for when self-employed individuals must make quarterly payments
• GST/HST registration: obligations for businesses earning over $30,000 annually

Home daycare providers are usually exempt from GST/HST registration if they care for children under 14 for less than 24 hours a day.

The next chapter focuses on how to report your income.

Chapter 2: Income

Chapter 2 shows you exactly which tax forms to complete based on your business type:

• Sole proprietors: complete Form T2125 for business, professional, farming, or fishing income
• Partnerships: complete different forms depending on partnership structure
• Multiple income types: complete separate T2125 forms for each income source

Form T2125 is divided into several parts. Here's what each part covers.

Part 1: Identification

Part 1 captures your business identification details. You'll enter:

• your CRA account number and industry codes
• your partnership business number (if applicable)
• your Social Insurance Number (SIN)
• your tax shelter identification number (if applicable)

As of 17 June 2024, individuals with a SIN that starts with 9 can use the Business Registration Online service to register and instantly obtain a business number and GST/HST account.

Part 2: Internet business activities

Complete Part 2 if your business earns income online. This includes selling goods through a website, offering online booking, or selling advertising on your sites.

Part 3: Income

Part 3 covers your income reporting and breaks into two sections:

• Part 3A: complete this for business income
• Part 3B: complete this for professional income

If you have both business and professional income, complete a separate Form T2125 for each. This form combines the two previous forms: T2124 (Statement of Business Activities) and T2032 (Statement of Professional Activities). Part 3 also covers gross income, cost of goods sold, and farming and fishing income.

After reporting your income, you'll need to account for your business expenses.

Chapter 3: Expenses

Chapter 3 explains which business expenses you can deduct to reduce your taxable income. You can generally deduct expenses incurred to earn business income, whether already paid or payable. The chapter covers two main expense types:

• Current expenses: Day-to-day operating costs you can deduct immediately
• Capital expenses: Major purchases that must be depreciated over time

Part 4 details the specific expenses you can claim.

Part 4: Net income (or loss) before adjustment

Part 4 explains which expenses you can deduct, including:

• mortgage interest, business licence fees, and property taxes
• professional fees, office expenses, repairs, and maintenance
• passenger vehicle costs, such as leasing and motor vehicle expenses

You can also claim input tax credits for GST and HST if applicable. If you're claiming motor vehicle expenses, this section outlines which records you must keep.

After calculating your deductions, you'll arrive at your final net income or loss.

Part 5: Your net income (or loss)

Part 5 calculates your final net income or loss. This section includes:

• A line for entering business-use-of-home expenses
• Details you need to provide about partners if you're part of a partnership

Chapter 4 explains how to depreciate business assets over time.

Chapter 4: Capital cost allowance (CCA)

Capital cost allowance (CCA) is how you deduct the cost of business assets over time. Chapter 4 covers:

• What qualifies: equipment, building alterations, and other depreciable property

FAQs on Guide T4002

Here are answers to common questions about using Guide T4002 for your self-employment taxes.

Where can I download Guide T4002?

You can download Guide T4002 from the Government of Canada website at any time. You can view it online or save the PDF to print for your records.

Who needs to use Guide T4002?

Self-employed individuals in Canada who run unincorporated businesses should use this guide. This includes sole proprietors, commission salespeople, home daycare providers, farmers, fishers, and partnership members.

What form do I complete for self-employment income?

Most self-employed individuals complete Form T2125 to report their business, professional, farming, or fishing income. The guide provides detailed instructions for completing this form.

When do I need to register for GST/HST?

You must register for GST/HST when your business revenue exceeds $30,000 in any calendar quarter or year. Home daycare providers may be exempt if they care for children under 14 for less than 24 hours a day.

What expenses can I deduct?

You can deduct expenses incurred to earn business income, including home office costs, vehicle expenses, professional fees, office supplies, repairs, maintenance, and equipment depreciation through capital cost allowance.