Alternate year ends
The general requirement is to report business income on the T2125 on a calendar year basis. However, it is possible to elect to use an alternate year end.
When the individual elects for an alternate year end, the calculation of net income occurs on the T1139 (see the T2125/T1139).
To claim an alternate year end and complete the T1139, first choose an option in the Fiscal Period Type drop-down of the T2125:
- December 31 year end—Standard calendar year, or a new business started in the year with a year that ends on December 31. Nothing calculates on the T1139 as it does not apply.
- First year Alternative method election—Both start and end date fields become editable so you can enter the exact dates. On the T1139, the election check box is checked, and Part 2 adds the additional prorated income.
- Alternative method (previously so elected)—The end date calculates to a year after the start date. T1139 Part 2 includes the prior year additional income amount that appears just under the identification section on the T2125.
- Converting to December 31 year end—Creates a second T2125 for the “stub” period from the end of the first fiscal period to December 31. It also completes Part 1 of the T1139 with the income from both periods and deducts the additional income from last year.
- Closing business—Sets the last year of business check box to the right of the dates to Yes. Nothing calculates on the T1139 as it no longer applies.