GIFI Income and Expense Codes, With Examples

Definition

The GIFI's income and expense items drive Schedule 125, the standardized income statement filed with a T2. Revenue items run from 8000 to 8299 and separate trade sales from investment revenue, rental revenue and other income. Expense items run from 8300 to 9368: cost of sales first, then operating expenses, then the two totals. Above that sit the farming items, 9370 to 9899, and the extraordinary items and income taxes, 9975 to 9999.

Revenue less expenses gives net income, which after Schedule 1 adjustments becomes income for tax purposes on the T2. This page is the income statement half of the system; the balance sheet half and the map of every range are in GIFI codes by range.

Key rules

• Revenue is recorded net of GST/HST and PST. Sales tax collected is a liability at item 2680 Taxes payable, not revenue.
• Use the most specific item available. Preserve the detail in the financial statements. When nothing fits, use the generic item at the top of the block rather than inventing a mapping.
• Meals and entertainment sits at item 8523 and is recorded at book cost after eligible recoverable taxes, before the income-tax deduction limit. The non-deductible portion is an add-back on Schedule 1, not a book adjustment.
• Amortization at item 8670 is the book figure and does not equal tax CCA. The tax claim is computed on Schedule 8 and reconciled through Schedule 1.
• Item 8710 Interest and bank charges is the generic for the whole interest block. Bank charges alone are item 8715, credit card charges are 8716, and interest on long-term debt is 8714, if any of them is worth separating.
• Item 9367 Total operating expenses and item 9368 Total expenses are reported totals, often calculated by the tax software. Item 9368 equals item 8518 Cost of sales plus item 9367.

Example

The income and expense items a small Canadian service corporation actually uses, with the CRA name for each one:

Codes that are easy to get wrong

These six pairs are next to each other in the list and mean different things.

Two more that are not neighbours but get mixed up. Item 8090 is Investment revenue, the generic for the interest and dividend block; the specific interest items are 8091 to 8094 and dividend income is 8095. And item 8089 is Total sales of goods and services, a computed subtotal, not a contra item for discounts or returns. Discounts, rebates, returns and allowances are netted inside item 8000 itself.

Common mistakes

• Coding subcontractors to a made-up item. Contract labour, custom work and outside labour are item 8360 Trades and sub-contracts.
• Posting GST/HST collected to item 8000 revenue instead of item 2680 Taxes payable, which inflates the top line.
• Coding owner compensation paid as dividends to item 9060 Salaries and wages. Dividends reduce retained earnings through item 3700 on Schedule 100. Only employment income belongs at 9060.
• Setting book amortization equal to the tax claim. Book amortization at item 8670 follows the accounting policy; CCA follows Schedule 8.
• Capitalizing what should be expensed, or the reverse. Repairs that keep an asset working are item 8960 Repairs and maintenance; an improvement may need capitalization based on the facts and accounting framework. Assess the separate tax treatment too.
• Omitting required computed totals, or using them as substitutes for detailed expense classifications.

Related concepts

The revenue and expense totals form the backbone of Schedule 125 and the income statement. Non-deductible book expenses are added back on Schedule 1. For deductibility rules see meals and entertainment, vehicle expense, and professional fees. The full coding system is summarized in GIFI Codes by Range, With the Most Used Codes.