Taxation Of Sole Proprietorship A sole proprietor pays taxes by reporting income (or loss) on a personal income tax return (T1). The proprietorship’s income (or loss) forms part of the individual’s overall income for the year. Generally, if you're a sole proprietor, you must file a personal income tax return if you: have to pay tax for the year; disposed of a capital property or had a taxable capital gain in the year; are required to make Canada Pension Plan/Quebec Pension Plan (CPP/QPP) payments on self - employed earnings or pensionable earnings for the year; or received a demand from CRA to file a return.
The list above does not include every situation where you may be required to file. If you're unsure, officers at Canada Revenue Agency (CRA) are available to assist you. Your accountant would also be able to assist you. Under current income tax legislation, the business fiscal year-end must be December 31. The income tax is due by April 30 following the December 31 year end, but the personal income tax return including the proprietorship has a filing deadline of June 15. Quarterly instalments for income tax and Canada Pension Plan may be required for the proprietorship; there are alternative methods of calculating the instalment base where an accountant could assist you. As a sole proprietor, your income tax return must include financial statements of one or more of the following applicable forms: · Form T2124, Statement of Business Activities; · Form T2032, Statement of Professional Activities; · Form T2042, Statement of Farming Activities or Farming Income and NISA (Form T1163, NISA Account Information and Statement of Farming Activities for Individuals, and Form T1164, NISA Account Information and Statement of Farming Activities for Additional Farming Operations); or · Form T2121, Statement of Fishing Activities. For current tax rates on personal business income in Alberta click HERE. Click HERE for more discussion on Taxation of Proprietorships. Careful planning with a Chartered Accountant is warranted. Contact Keith Anderson CA at (780) 447-5830 if you need advice. Legal Notice And Disclaimer Privacy Statement | 
