What is the Profit Test and how might it affect my Canadian income tax?
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What is the Profit Test and how might it affect my Canadian income tax?

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This topic contains 1 reply, has 1 voice, and was last updated by Avatar of Robert Robert 7 years, 11 months ago.

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  • #5041
    Avatar of Robert
    Robert
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    We have a question from a client:
     
    What is the Profit Test and how might it affect my Canadian income tax?

    #5042
    Avatar of Robert
    Robert
    Member

    The profit test is used by the Canada Revenue Agency to determine whether or not an individual is operating a business with the reasonable expectation of generating a profit. If so, it would be deemed as a business for income tax purposes and can claim business-related expenses. There are several factors to consider such as the profit and loss experienced in past years, the amount of time spent in the activity, personal qualifications, and the relevance of expenses incurred, among other factors.

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