Schedule 1, Net Income (Loss) for Income Tax Purposes
Schedule 1, Net Income (Loss) for Income Tax Purposes
Effective January 1, 2024, any deduction from income from non-compliant short-term rentals is disallowed to the extent of the non-compliant amount. On line 295 of Schedule 1, enter the non-deductible amount for non-compliant shortterm rentals.
Generally, the net income (loss) reported on your financial statements will not be the same as the net income (loss) required for tax purposes. This is because certain income and expenses reported on your financial statements or the General Index of Financial Information (GIFI) may not be used in the calculation of net income (loss) for tax purposes.
For example, you do not deduct charitable donations when determining net income for tax purposes, as you would to arrive at net income on your financial statement.
Note
Charitable donations are deducted (afterward) from net
income for tax purposes to arrive at taxable income.
Use Schedule 1 to reconcile the net income (loss) reported on your financial statements and the net income (loss) required for tax purposes.
Enter net income or loss after income tax and extraordinary items at amount A, page 1 of Schedule 1. Add the taxable items and the non-allowable expenses listed on lines 101 to 199 and subtract from this the non-taxable items and eligible expenses listed on lines 401 to 499.
Additions and deductions identified on lines 101 to 132 and 401 to 418 of Schedule 1 are the most common additions and subtractions. For other additions and deductions, see pages 3 and 4.
Some expenses deducted on your income statement are not allowable for income tax purposes and are not identified on Schedule 1. In this case, use columns 605 and 295, and line 296, "Other additions", on page 3.
Also, certain items included in income that are not taxable are not identified on this schedule. In such cases, complete columns 705 and 395, and line 396, "Other deductions", on page 4.
Notes
Only complete lines 203 and 302 if you are converting
from an accrual basis to a cash basis. Otherwise, these
lines should be left blank.
The deductible portion of expenses you incurred for food, beverages, and entertainment is only 50% of whichever is less: the expenditure actually incurred or the amount that would be reasonable in the circumstances.
Eighty percent of expenses for food and beverages consumed by a long-haul truck driver during an eligible travel period are deductible. For more information, see Guide T4002, Self-Employed Business, Professional, Commission, Farming, and Fishing Income, or go to canada.ca/taxes-employment-expenses and select "Transportation employees."
A full deduction is allowed for meals provided to an employee at a temporary construction work camp, if certain conditions are met. For more information on this subject, go to canada.ca/taxable-benefit.
Taxable capital gains or allowable capital losses allocated by a partnership to a corporate partner are not included on line 129 of Schedule 1 of the corporate partner.
Instead, the corporate partner's share of the partnership's capital gain or loss should be reported on Schedule 6 of the corporate partner.
You may have to use the following schedules to calculate certain amounts on Schedule 1:
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Schedule 6, Summary of Dispositions of Capital Property (for details, see below)
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Schedule 8, Capital Cost Allowance (CCA) (see page 45)
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Schedule 12, Resource-Related Deductions (see page 64)
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Schedule 13, Continuity of Reserves (see page 64)
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Schedule 16, Patronage Dividend Deduction (see page 65)
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Schedule 17, Credit Union Deductions (see page 65)
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Schedule 73, Income Inclusion Summary for Corporations that Are Members of Partnerships (see page 15)
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Form T661, Scientific Research and Experimental Development (SR&ED) Expenditures Claim (see page 65)
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