Reporting your income

If you determine that you are self-employed, report your income from daycare as business income on your income tax return. Include gross income on line 162 and net income or loss on line 135.

To calculate your net income (loss), we encourage you to use Form T2125, Statement of Business or Professional Activities. However, we continue to accept other types of financial statements.

If you use Form T2125, complete the "Identification" section. In the "Industry code" box, enter "624410" which is the code for daycare.

Enter your gross income from daycare on line A in "Part 1 - Business income" of Form T2125.

Your gross income from the daycare business includes all the income you earned by providing daycare during the year. This income would include payments from parents, as well as subsidies (such as provincial or territorial grants to care for children).

If you receive a grant to buy daycare equipment, do not include in your income the part of the grant that you used to buy the depreciable equipment. Instead, reduce the capital of the property by the applicable part of the grant. Also, see Capital Cost Allowance (CCA) for your daycare.

To calculate your net income, you can generally deduct (from your gross income) expenses that you incur to earn income from your daycare services.

Penalties

Include all your income when you calculate it for tax purposes. If you fail to report all your income, you may be subject to a penalty of 10% of the amount you failed to report after your first omission.

A different penalty may apply if you knowingly or under circumstances amounting to gross negligence participate in making a false statement or omission in your tax return. In such a case, the penalty is 50% of the tax attributable to the omission or false statement (minimum $100).

Filing deadline

If you have self-employment income, you and your spouse or common-law partner must file your income tax return by June 15 to avoid possible late filing penalties. However, to avoid interest charges, you have to pay any balance owing by April 30.

If either date falls on a Saturday, Sunday or statutory holiday, you have until the next business day to file your return or make your payment.

Forms and publications

• Guide T4002, Business and Professional Income
• Booklet P134, Using Your Home for Daycare
• Form T2125, Statement of Business or Professional Activities

Related topics

• Sole proprietors and Partnerships
• Accrual method of accounting
• Capital Cost Allowance (CCA) for your daycare

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