Reporting Income/expenses from book publication

[Book Sales]

My husband had a children's book published in 2023 and sold the bulk of them himself.  Our expenses to have the book published, printed and shipped (just over $5,000.00) were greater than our income (close to $3000.00) but I don't know how to report any of it on his income tax return.  (Also, we did not collect GST - should we have?)  Can you advise please? 

Thank you!!!

[Geo123]

Hello Book Sales,

Please note we do not provide tax advice.    You can consult the link below or contact the CRA.

CRA - Income Tax Folio S4-F14-C1, Artists and Writers

https://www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-4-businesses/folio-14-income-artistic-endeavours/income-tax-folio-s4-f14-c1-artists-writers.html

If an artist or writer who is self-employed :

1. On the "Left-side menu of the Interview tab", select "Interview setup".
2. On the screen that appears on the right, go to the "Self-employment" group, check the box "Self-employed business income", also if you paid tax by instalments. Then go to the "Tax paid by instalments and tax transfer" group and check the box "Tax paid by instalments and tax transfer" and click "Next" at the bottom of the page.
3. Return to the "Left-side menu on the Interview tab", click on "Self-employment income" and select the option "T2125 - Business income" on the right-hand side page.
4. On the "Business identification" page, enter the name of your business on the line "Business name (or your own name, if the business does not have one ", then enter the other information in the mandatory fields marked with a red asterisk.
5. On the field for "6-digit code from the North American Industry Classification System", enter the NAICS code that best describes your industry. If you do not know the NAICS code, click on the tool tip (the question mark) (?) on the right-hand side of the box to access a list of NAICS codes.
6. On the line "Products or services and their respective percentage (%) in the total income (mandatory for a Quebec return) ", in the field on the right, enter your main service or product and enter the percentage (%). If you have other products or services, click on the "plus sign +" icon on the right to generate another field.
7. Subsequently, after identifying your company, a submenu will appear on the "Left-side menu of the Interview tab" to allow you to enter the "Income & expenses", "Motor vehicle expenses", "Home office expenses" and so on.
8. On the next page ''Income, expenses'', on the line ''Gross sales, commissions or fees'', you must enter a value, if you have no income, enter $0, 00 as this is a required field. NOTE: for expenses, if your company is registered for GST and HST (QST), these expenses must be entered before taxes to reflect the ITRs (input tax refund) and ITCs (input tax credit) you claimed.
9. If you had partners, choose the subsection "Partners" and if you want to claim capital cost allowance for your office furniture and equipment, choose subsection "CCA" and select on this page the classes that apply to your profession.
10. For residents of Quebec, if you wish to pay your registration fee for Quebec, return to the "Left-side menu on the Interview tab" and choose the option ''Q438 - Quebec annual registration fee for the enterprise register''.
We recommend that you read the T4002 guide published by the CRA, for more information on what qualifies as a business expense.
For more information, please visit the following link:
https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4002.html
For Quebec residents, we suggest that you consult the "Business and Professional Income" guide, published by Revenu Québec. You can visit the following link:
https://www.revenuquebec.ca/en/online-services/forms-and-publications/current-details/in-155-v/
The program will also generate federal form T2125, as well as Quebec form TP-80 if applicable.
The gross and net amounts will be reported by the program on lines 13499 and 13500 of the federal return and, for Quebec   residents, on lines 12 and 22 of Quebec Schedule L.