Self-Employed Tax Records Checklist: What to Keep for a Canadian T2125 Return

Short answer

For Form T2125, keep records that support every dollar of business income and every expense you claim. That means sales invoices, platform statements and deposit records, receipts showing the date, supplier and description, a vehicle logbook, home-office calculations and records of assets you buy. The CRA generally requires you to keep these for six years.

What Form T2125 reports

Form T2125, Statement of Business or Professional Activities, is where sole proprietors report business and professional income and expenses on their personal return. (Source: CRA – Form T2125) Many freelancers, contractors and gig workers file it.

The CRA does not want your records sent in with the return. Its guidance says to keep them in case the CRA asks to see them. (Source: CRA – Business records) Legally, you must keep records of all your transactions so you can support the income and expenses you claim. (Source: CRA – Business records)

Self-employed filing and payment deadlines can differ, so check the CRA’s current personal income tax due dates page before you file.

Income records

The CRA says income records should show the date, amount and source of the income. (Source: CRA – Business records) Record your gross income, meaning the total before expenses, whether you were paid in cash, property or services.

Supporting documents for income

• Sales invoices you issued
• Receipts and cash register tapes
• Bank deposit slips or deposit records
• Fee statements, including statements from platforms or apps that pay you
• Contracts with clients

These examples of supporting documents come from the CRA’s business records guidance. (Source: CRA – Business records)

Keep a single income list that you can match against your bank deposits. If a platform pays you net of its fees, keep the statement that shows the gross amount and the fees. That way the figure you report can be traced back to its source.

Expense records

According to the CRA’s business records guidance, a receipt or invoice for an expense should show (Source: CRA – Business records):

• the date of purchase
• the seller’s or supplier’s name and address
• the buyer’s name and address
• a full description of the goods or services

For GST/HST input tax credit claims, CRA documentary requirements may require the supplier’s GST/HST registration number and other information, depending on the purchase amount. See the GST/HST input tax credit records guide.

A bank or credit card statement shows that money left your account, but it usually does not describe what you bought. Keep the receipt or invoice as well.

Organize expenses the way T2125 reports them

The expenses section of T2125 uses set lines. (Source: CRA – Expenses section of Form T2125) Sorting receipts into matching categories through the year makes the return easier to prepare. Common lines include:

• Advertising (line 8521)
• Meals and entertainment (line 8523)
• Insurance (line 8690)
• Interest and bank charges (line 8710)
• Business taxes, licences and memberships (line 8760)
• Office expenses (line 8810) and office stationery and supplies (line 8811)
• Professional fees, including legal and accounting fees (line 8860)
• Rent (line 8910)
• Salaries, wages and benefits (line 9060)
• Travel expenses (line 9200)
• Utilities (line 9220)
• Motor vehicle expenses, not including capital cost allowance (line 9281)

Which expenses you can deduct, and how much, is a separate question. Our small business tax deductions guide covers the common categories.

Records for equipment and other capital purchases

The CRA says you cannot deduct the cost of capital property, such as equipment or a vehicle, as a regular expense. Capital property is generally claimed over time through capital cost allowance (CCA) on line 9936. (Source: CRA – Expenses section of Form T2125)

For each asset, the CRA’s guidance says property records should show (Source: CRA – Business records):

• who you bought it from
• the cost and date of purchase
• if you later sell or trade it, the date and the amount you received

The CRA’s retention guidance says records of property acquisitions and disposals may need to be kept longer than the usual six years. (Source: CRA – Where to keep your records and for how long) Keep these for as long as you own the asset, and beyond.

Vehicle and home-office records

Motor vehicle

If you claim vehicle expenses, the CRA expects a logbook of business trips showing the date, destination, purpose and kilometres driven, plus odometer readings at the start and end of the fiscal period. (Source: CRA – Motor vehicle records) Keep receipts for the expenses too. Our business mileage logbook guide covers the full and simplified logbook options.

Business use of home

You can claim business-use-of-home expenses only if the workspace is your principal place of business, or if you use it only to earn business income and regularly meet clients there. (Source: CRA – Business-use-of-home expenses) The CRA says to calculate the business part on a reasonable basis, such as the workspace area divided by your home’s total area. (Source: CRA – Business-use-of-home expenses) Keep:

• the measurements behind your workspace percentage
• bills for heating, electricity, home insurance and maintenance
• property tax and mortgage interest statements, if you own the home, or rent receipts, if you rent

These expenses cannot create or increase a business loss. The CRA allows unused amounts to be carried forward if you still meet the conditions. (Source: CRA – Business-use-of-home expenses)

How long and where to keep records

• Six years: the CRA generally requires records to be kept for six years from the end of the last tax year they relate to. (Source: CRA – Where to keep your records and for how long)
• Late-filed returns: the six years run from the date the return was filed. (Source: CRA – Where to keep your records and for how long)
• Location: keep records at your place of business or residence in Canada, unless the CRA gives you permission otherwise. (Source: CRA – Where to keep your records and for how long)
• Electronic records: records created electronically must be kept in an electronically readable format, even if you also print them. (Source: CRA – Acceptable formats and imaging paper documents)
• Scanned receipts: the CRA has conditions for imaging paper records and destroying the originals. Check them before discarding paper. (Source: CRA – Acceptable formats and imaging paper documents)
• Using a bookkeeper: the CRA says you remain responsible for adequate records even when a bookkeeper or accountant keeps them for you. (Source: CRA – RC188 Keeping Records)

T2125 records checklist

Income

• Every sales invoice issued during the year
• Platform and app statements showing gross earnings and fees
• Bank deposit records matched to your income list
• Records of cash, and of payments received in property or services

Expenses

• Receipts and invoices showing date, supplier, buyer and description
• Receipts sorted by T2125 expense category
• Credit card and bank statements for the business accounts
• Supplier GST/HST details needed for input tax credit claims, if you are a registrant

Assets, vehicle and home

• Purchase and sale records for equipment, computers and vehicles
• Vehicle logbook with start-of-year and end-of-year odometer readings
• Vehicle expense receipts
• Workspace measurements and home expense bills

Storage

• Records kept in Canada, organized by tax year
• Electronic files backed up and readable
• Records set to be kept at least six years after the tax year they relate to

Free downloadable template

Two files help you apply this checklist. The Self-Employed Records Checklist (PDF) is a printable list for gathering income, expense, vehicle, home-office and asset records before your return is prepared. The Self-Employed Income & Expense Tracker (XLSX) is a spreadsheet for logging income and expenses by category through the year.

Download the Self-Employed Records Checklist (PDF) and Download the Self-Employed Income & Expense Tracker (XLSX). No email address required.

This template helps organize records. It does not determine eligibility, deductions, tax owing, or filing requirements.

Frequently asked questions

Do I send my receipts to the CRA with my T2125?

No. The CRA says not to send records with your return, but to keep them in case it asks to see them. (Source: CRA – Business records)

Are bank and credit card statements enough on their own?

Usually not. The CRA says records must give enough detail to determine your tax obligations. Receipts should describe the goods or services, which a statement often does not. (Source: CRA – RC188 Keeping Records; CRA – Business records)

Can I keep digital copies of paper receipts?

The CRA accepts imaged records if they meet its conditions, including being an accurate, legible reproduction. (Source: CRA – Acceptable formats and imaging paper documents) Review the CRA’s imaging guidance before you destroy paper originals.

How long do I need to keep self-employed records?

Generally six years from the end of the last tax year they relate to. It is longer for late-filed returns and for some property records. (Source: CRA – Where to keep your records and for how long)

My bookkeeper keeps my records. Am I still responsible?

Yes. The CRA says you are responsible for adequate records even if a bookkeeper or accountant keeps them for you. (Source: CRA – RC188 Keeping Records)

Official sources

• Canada Revenue Agency, Business records: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-records.html
• Canada Revenue Agency, T2125 Statement of Business or Professional Activities: https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t2125.html
• Canada Revenue Agency, Expenses section of form T2125: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/report-business-income-expenses/completing-form-t2125/expenses-section-form-t2125.html
• Canada Revenue Agency, Business-use-of-home expenses: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/report-business-income-expenses/completing-form-t2125/business-use-home-expenses.html
• Canada Revenue Agency, Motor vehicle records: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-expenses/motor-vehicle-expenses/motor-vehicle-records.html
• Canada Revenue Agency, Where to keep your records, for how long and how to request permission to destroy them early: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/keeping-records/where-keep-your-records-long-request-permission-destroy-them-early.html
• Canada Revenue Agency, Acceptable format, imaging paper documents and backing up electronic files: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/keeping-records/acceptable-format-imaging-paper-documents-backing-electronic-files.html
• Canada Revenue Agency, RC188 Keeping Records: https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc188/keeping-records.html
• Canada Revenue Agency, Due dates and payment dates – Personal income tax: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/important-dates-individuals.html