A sole proprietor used a credit card for business and earned a cashback amount of $300.00
In tax cycle where are others entering such amounts?
I see Part 3C - Gross business or professional income there is a line called Other income (specify)* which flows to line 8230.
Is there another more appropriate line or way of reporting this income on the T2125?
" line or way of accounting for that income"
As far as I am aware, Taxcycle is not an accounting program, so therefore I would not use Taxcycle to keep a business’s accounting records to comply with Section 230. (The offence provisions pursuant to S238 are just not worth it). Definitely start there.
“Accounting” can have more than 1 meaning Joe. He clearly meant “Is there a special way of reporting this income on the T2125?”
Yes, you can put it there. Alternatively, if the bank fees are high enough, you can record it as a rebate against those, thus decreasing the costs. Make sure to keep proper accounting/bookkeeping records, whatever you do.
There are a few exceptions but generally credit card perks are not taxable.
You are correct that they generally aren’t. However, those that are cash or cash equivalent that are used for business purposes are taxable. In some instances CRA has even ruled that Air Miles are taxable.
I wouldn’t report cashback as taxable income. It isn’t earned income per se.
Rewards, points, miles and even cash back and all considered discounts, not income.
You typically don’t receive actual physical cash that you can use wherever you want for any purpose, rather a credit (or discount) toward future purchases with a specific credit card company and/or vendor. It’s not income.
CRA has ruled that Air Miles used for business purposes are equal to cash, therefore considered income. I believe that the ruling also shows that any “cash back” amount that is used to pay down a credit card is ruled as income, or at least must be used to reduce bank fees or similar expense. That may be a separate ruling, it’s hard to remember.
Tangerine Mastercard deposits actual cash into an account.