How can I find out CPP payments to CRA for self employed person? Where do I see the CPP remittance amount?
Thanks very much in advance.
The amount will be calculated in Part 4 of Schedule 8 in the tax return. The full amount owing will show on line 42100 of the Jacket, and the deduction they get for 1/2 of the CPP will be on line 22200 of the Jacket. The rate for an employee for CPP is 5.45% for 2021 - it is double that for a self-employed person.
Thanks very much Janis!
Do you where can I enter lab charges, tool and material charges in T2125 for house inspections business?
Once again, I really appreciate your help Janis!
I would just use the blank line below line 9936, under where it says "Capital cost allowance". Each time you enter there, a new line will be created. Make sure your tools are not capital. CRA has a pretty good, plain English guide for reporting business income on their website, as well.
CPP for the self-employed on a T2125 can be a real shocker. For 2021, the rate was 5.45% and the self-employed get to pay both sides so their rate was 10.90% of net income (minus, of course, the $3500). A quick calculation will be to take the net self-employed income (gross less expenses) for the year, deduct $3,500.00, and then multiply by 0.1090. You can see the calculation at the bottom of S8. Should there be a combination of employment income and T2125 income, the calculation will vary depending on how much was deducted by an employer, but the principle remains the same.
If you have self-employed clients, you need to spend some time explaining the nuances of being self-employed. Right now, there are no EI contributions required, but CPP is mandatory. I've known cases where there was no income tax owing, but a fair bit of CPP.
Now on to the second query - how to enter "odd" items on the T2125. I agree, it's not exactly designed to be user-friendly - too much office and not enough other expenses listed. However, you can enter different line items under line 9936 (CCA) if you feel the need to itemize same. Otherwise, here's my suggestions:
Lab charges - professional fees (line 8860) or separate line item.
Tools - depends upon the cost. A tool costing over $500 automatically is a capital item and should be treated as such - think Class 8. For tools under $500, one is supposed to put them in Class 12 and take over two years because of the half year rule. However, good old R&M works well (line 8960), particularly if there are a lot of very small items.
Material costs - again can use R&M or put as a separate line item if you wish.
Hope this helps.