164 – Business income
If you carried on a business in 2016, use Schedule L to report your gross income and your net income (or net loss), calculated according to the accrual method. However, if you are a farmer, a fisher or a person who earns commissions, you can use the cash method to calculate your net income.
With your return, enclose either form TP-80-V, Business or Professional Income and Expenses, or your financial statements. If you carried on more than one business, you must submit a separate form or separate statements for each business. If your income was derived from farming or fishing, enclose your financial statements.
All sole proprietorships and partnerships are required to report their income and can do so on the basis of a fiscal period ending either on December 31 or on a date other than December 31, which must be the same as the date chosen for federal purposes. If the fiscal period ends on a date other than December 31, the business must add to its income the estimated income for the period between the end date of the fiscal period and January 1 of the following year. To calculate this estimated income, complete form TP-80.1-V, Calculation of Business or Professional Income, Adjusted to December 31. Enclose the form with your return.
Form to enclose
Calculation of Business or Professional Income, Adjusted to December 31 (TP-80.1-V)
Revocation of an election to end your fiscal period on a date other than December 31
If your fiscal period ended on a date other than December 31, 2016, but you have elected to adopt an end date of December 31, you are required to submit two copies of form TP-80-V or two sets of financial statements: one for the fiscal period ended before December 31, 2016, and the other for the fiscal period ended on December 31, 2016.
Once you have adopted December 31 as the end date of your fiscal period, you cannot revert to a fiscal period ending on a date other than December 31.
For more information, consult the guide Business and Professional Income (IN-155-V).
If your business sustained a loss, enter the amount of the loss, preceded by a minus sign (−), on the appropriate line of Schedule L. As a rule, if this amount is more than the total of your income from other sources, you can use the excess amount to reduce your income for the previous three years or (in most cases) your income for the next twenty years. If you wish to use a loss to reduce your income from previous years, complete form TP-1012.A-V, Carry-Back of a Loss, and file it separately from your return.
Farming (lines 13 and 23 of Schedule L)
On line 13 of Schedule L, enter the gross income resulting from the operation of a farming business. If you were a member of a partnership, enter the partnership's gross income.
On line 23 of Schedule L, enter the net income (or net loss) resulting from the operation of a farming business. If you were a member of a partnership, enter your share of the net income (or of the net loss). If you were a specified member (This link will open a new window) of a partnership, see Income from a partnership of which you were a specified member below.
If you sustained a farm loss, contact us to find out the rules for calculating the loss.
End-of-career allowance received by a physician (line 28 of Schedule L)
If you are a physician and you received an allowance as part of a program providing end-of-career allowances to physicians (provided you did not practise your profession as a self-employed person in 2016), enter the amount of the allowance on line 28 of Schedule L. If you received the allowance as a salaried physician, enter the amount of the allowance on line 154 instead.
Member of a partnership
If you were a member of a partnership, enter the partnership's gross income and your share of the net income (or of the net loss). If you were a specified member (This link will open a new window) of a partnership, see Income from a partnership of which you were a specified member below.
If you did not receive an RL-15 slip, enclose a copy of the partnership's financial statements or form TP-80-V, Business or Professional Income and Expenses.
Income from a partnership of which you were a retiring partner (line 28 of Schedule L)
Enter the share of a partnership's income or losses that the partnership allocated to you:
- as a retiring partner, for the period in which you were not a member of the partnership; or
- as the surviving spouse of a deceased member of the partnership (provided you were not a member or employee of the partnership and did not carry out any activities on behalf of the partnership). This amount may be shown in box 1-10 of your RL-15 slip.
Income from a partnership of which you were a specified member (line 29 of Schedule L)
Enter your share of the income or losses of a partnership of which you were a specified member (This link will open a new window). This amount is shown in box 1 of your RL-15 slip if the code “0” or “1” appears in box 40 of the slip.
If, on line 29 of Schedule L, you enter a loss from a partnership of which you were a specified member (This link will open a new window), see the instructions for line 260 and complete Schedule N.
If you did not receive an RL-15 slip, enclose a copy of the partnership's financial statements. Enter your share of the partnership's income, excluding any amounts you can report elsewhere in your income tax return.
If you did not receive an RL-15 slip, enclose a copy of the partnership's financial statements.
Insurable earnings (QPIP) and pensionable earnings (QPP) of a person responsible for a family-type resource or an intermediate resource (line 40 of Schedule L)
If you received an RL-29 slip, enter on line 40 of Schedule L the amount of your insurable earnings and pensionable earnings (calculated on form LM-53-V, Insurable Earnings under the QPIP and Pensionable Earnings under the QPP of a Person Responsible for a Family-Type Resource or an Intermediate Resource). This amount will be used to determine the amount of your Québec Pension Plan (QPP) contribution and Québec parental insurance plan (QPIP) premium on income from self-employment. For more information, see the instructions for lines 439 and 445.
Form to enclose
Insurable Earnings Under the QPIP and Pensionable Earnings Under the QPP of a Person Responsible for a Family-Type Resource or an Intermediate Resource (LM-53-V).
Foreign business income
You must report your foreign business income (in Canadian dollars). See "You earned amounts in foreign currency" on the page entitled Total Income.
Disposition of incorporeal capital property
If you disposed of incorporeal capital property (goodwill, a trademark, your list of customers, a farm quota, etc.), the gain realized on the eligible incorporeal capital amount constitutes business income. If the property disposed of was qualified farm or fishing property, you may be entitled to a deduction for the gain. See the instructions for line 292.
If you disposed of incorporeal capital property, you can, in certain cases, consider the gain realized on the property to be a capital gain. For more information, consult the guide Capital Gains and Losses (IN-120-V).
Financial assistance received as a result of a disaster
If you received financial assistance as a result of a disaster, consult the guide The Tax Effects of Financial Assistance Received as a Result of a Disaster (IN-125-V).
Government payments (RL-27 slip)
If you received an RL-27 slip, the amounts shown on this slip must be included in the calculation of your business income.
Income averaging for forest producers
If, under the Sustainable Forest Development Act, you are a certified forest producer (or a member of a partnership that is a certified forest producer) regarding a private forest, you may be able to request that a portion of the income generated by the non-retail sale of timber produced in the private forest be averaged. See point 21 in the instructions for line 297.
In calculating your business income, do not take into account professional dues paid to maintain your professional status, dues paid to a recognized artists' association or the contribution paid to the Office des professions du Québec. However, these amounts entitle you to a tax credit. See the instructions for line 397.
If, in 2016, you or your spouse carried on a business or earned income as a person responsible for a family-type resource or an intermediate resource, the deadline for filing your 2016 income tax return is extended to June 15, 2017. Regardless of the date on which you file your return, any balance due for 2016 must be paid by April 30, 2017. After that date, we will calculate interest on the unpaid balance.
If the expenditures you incurred in carrying on your business relate principally to tax shelters, the filing deadline cannot be extended to June 15, 2017.
You must provide information about any persons that carried out work for any of the following purposes, if you incurred labour costs (other than salaries and wages paid to your employees):
- maintaining, repairing or renovating a building from which you earned rental income, or a building that you owned and where you operated a business;
- maintaining, repairing or renovating commercial premises you rented; or
- maintaining land from which you earned rental income.
Complete form TP-1086.R.23.12-V, Costs Incurred for Work on an Immovable, and enclose it with your return. If you do not provide the required information, you are liable to a penalty.
If your total income from copyrights (This link will open a new window) or public lending rights was less than $60,000, and you are the first owner of the rights, you can deduct an amount for this income on line 297. See point 16 in the instructions for line 297.
Investments entitling you to certain tax benefits
If you invested in a business, enter your share of the income or losses resulting from the investment.
If you invested in a tax shelter after May 31, 1990, and wish to claim a deduction or a loss on your investment, enclose with your return a copy of form TP-1079.6-V, Statement of Losses, Deductions and Tax Credits Respecting a Tax Shelter. Contact us for the definition of “tax shelter” under the Taxation Act.
Interest paid after you ceased to carry on a business
Under certain conditions, you can deduct all or part of the interest you paid, after ceasing to carry on a business, on loans that you took out in order to earn income from the business. Contact us to determine the deduction to which you are entitled.
For more information, consult the guide Business and Professional Income (IN-155-V).