If you’re self-employed, the Canada Revenue Agency (CRA) needs you to take an extra step when it comes to filling out your business income tax return. In addition to declaring your income and completing the T2125 (which is used to report your business and professional income and expenses), you also need to provide the CRA with your industry code.
Your industry code is a six-digit number that corresponds to your occupation.
Statistics Canada uses the information gleaned from industry codes to track business trends, and the CRA uses industry codes to compare similar businesses in the same industry. The CRA will pay attention to any deviations from the industry standard so they can follow up with a review or an audit.
What is the industry code for my business?
• Agriculture, forestry, fishing, and hunting
• Mining, quarrying, and oil and gas extraction
• Retail trade
• Transportation and warehousing
• Accommodation and food services
The NAICS is updated every five years and was last updated in 2017. If your business has more than one revenue-generating income stream, you can use more than one NAICS code.
What if none of these codes describe my business?
The NAICS is pretty exhaustive, and has an industry code for virtually every occupation, from freight trucking, oil seed and grain farming, pet sitting and housekeeping to bookstores and butlers.
If you can’t find a matching description for your business, just choose the code that fits your business the best. You can also choose an industry or sub-sector.
A NAICS code can have up to six digits:
• The 1st and 2nd numbers represent the economic sector
• The 3rd number represents the sub-sector
• The 4th number represents the industry group
• The 5th number represents the industry
• The 6th number represents the national industry
FBC – Helping Canadian Business Owners Optimize Tax Returns
Why FBC? Since 1952, tax professionals at FBC have worked exclusively with Canadian small business owners, farm operators and independent contractors to optimize their tax returns.
To learn more about FBC and how we can help keep more money in your pocket, call us today at 1-800-265-1002 or submit an online form to request an appointment.