Hi, HB
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.
Jo Ruelle
