Bank Statements for T2125: How to Prepare a Year of Self-Employed Transactions
Form T2125 is where you report business or professional income and expenses in Canada. Your chequing account and credit card statements hold most of the numbers: convert a year of them into one spreadsheet, categorize each line, and total by category.
Not tax advice. This guide is about getting your bank transactions into a usable shape for Canadian filing. What you can claim depends on your situation: check the official guidance linked here or ask a tax professional. See our disclaimer.
What Form T2125 is for
The CRA says: “Use the T2125 form to report either business or professional income and expenses” (CRA: T2125). You need your gross income and your expenses broken down by type, which is exactly what a categorized list of bank transactions gives you.
Keeping your records
The CRA says you must keep required records and supporting documents for six years from the end of the last tax year they relate to (CRA: How long to keep records). Keep the bank’s own statements and your receipts; the spreadsheet is a working file built from them.
Step 1: Download the year’s statements
- Download each business chequing account and credit card for the whole year (usually January to December for an individual). Choose CSV where offered; older months may only be available as PDF eStatements.
- Download CAD and USD accounts separately and keep track of which is which.
- Include any personal card you used for business costs; you’ll mark only the business lines.
Step 2: Convert to one spreadsheet
- CSV exports: open them through Bank statement to QuickBooks and choose Excel as the output, so dates and amounts are read correctly. RBC’s CAD$ and USD$ columns are handled automatically (see RBC CSV).
- PDF eStatements: PDF bank statement to Excel; card statements: Credit card statement to Excel.
- Join the months with Combine CSV and Excel files, which also removes duplicate rows where downloads overlap.
Step 3: Categorize and total
| Column | What to put there |
|---|---|
| Date, Description, Amount | Straight from the converted statement |
| Business? | Yes, No or Part (for mixed personal and business spending) |
| Category | The income or expense line it belongs to on the form |
| Evidence | Where the receipt or invoice is (file name, folder or note) |
Use the expense lines on T2125 as your category names, then total each one with a pivot table or SUMIFS. Keep USD amounts in their own column until you’ve converted them to Canadian dollars the way your tax professional or the CRA guidance says.
Transfers between your own accounts, and money you take out for yourself, aren’t business expenses: mark them so they’re excluded.
Step 4: Check the totals
- Opening and closing balances for each account should match the first and last statements of the year.
- Business deposits, less transfers and loans, should be close to the income you report.
- If you use QuickBooks or Xero, import the converted files instead (see QuickBooks Online or Xero) and categorize there.
Frequently asked questions
Can I use bank statements to fill in T2125?
They are the quickest source for your income and expense totals. Keep the original statements and receipts as your records, and use a spreadsheet built from them to total each category.
How long should I keep my bank statements in Canada?
The CRA says to keep required records and supporting documents for six years from the end of the last tax year they relate to.
How do I handle a US-dollar account?
Download it separately and keep the amounts in their own column, then convert them to Canadian dollars following CRA guidance or your tax professional’s advice.