Business or Hobby

by Independent Consultant
(Canada)

When does a hobby become a business in CRA's eyes?

When does a hobby become a business in CRA's eyes?

I have started as an independent consultant with a direct sales company as a hobby.


I have made no income. When must I start claiming as a business on my taxes?



section divider



Check out what CRA's publication IT-334R2 Miscellaneous Receipts:

Hobbies

11. In order for any activity or pursuit to be regarded as a source of income, there must be a reasonable expectation of profit. Where such an expectation does not exist (as is the case with most hobbies), neither amounts received nor expenses incurred are included in the income computation for tax purposes and any excess of expenses over receipts is a personal or living expense, the deduction of which is denied by paragraph 18(1)(h). On the other hand, if the hobby or pastime results in receipts of revenue in excess of expenses, that fact is a strong indication that the hobby is a venture with an expectation of profit; if so, the net income may be taxable as income from a business. The current version of IT-504, Visual Artists and Writers, discusses the concept of "a reasonable expectation of profit" in greater detail. Where a hobby consists of collecting personal-use property or listed personal property, dispositions should be accounted for as described in the current version of IT-332, Personal-Use Property.

Comments for Business or Hobby

Click here to add your own comments

Mar 24, 2012
Is there a minimum profit amount?
by: Website Developer

I have a very small home business of developing websites.

This past tax year, I did not do any developing but did earn a small amount for hosting (approx. $200).

Is there a minimum amount I can make and not have to declare on my tax return?



section divider



You must declare all income, however see the above post on miscellaneous receipts.

Remember also, that as a business, you get to deduct your business expenses incurred to earn your revenue. This means you are taxed on your profit.

Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Home Business Taxes.

Enjoy A Tea Break With
Me Today. Let's Chat!

Use the search feature to quickly find the
information you're looking for.

Like this page? Please let Google
know by clicking the +1 button.






 Keep Your  eDocuments Safe And Secure… $7 USD
Version 2 now out
Bigger and Better



SHORTEN
Your Learning Curve!

Buy Now



Warm up your tea cup and check out these chats ...

Click on image above to read the chat.






Purchasing These Products Through My Links Helps To Support This Site

Click on image above for my review.






Join Me On Facebook

Help support this site by "liking" me! Here's where I post current information.

Listed Under Websites NOT Local Business.
This website is not associated with the business operating in Bonnyville AB.






A Handy Reference

Buy Now