T2 Schedule 125 (T2SCH125): Income Statement GIFI Codes
Schedule 125 (T2SCH125) is the corporation's income statement on the T2, reported with CRA GIFI items and ending at the book net income shown at item 9999.
Federal · Updated September 23, 2026
These lines are for the tax year ended December 31, 2025.
- January, books agree to the cent
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Definition
Schedule 125 (T2SCH125) is the income statement of the corporation for the tax year, presented using GIFI items. Every revenue, cost of sales and expense line on the trial balance maps to a standardized item. The final figure, item 9999, net income or loss after taxes and extraordinary items, is the book net income that Schedule 1. Net Income for Tax starts from.
Income statement items are selected from the 7000 to 9970 range, with items 9370 to 9899 reserved for farming income and expenses, and extraordinary items and income taxes selected from 9975 to 9999. The 7000 band holds the components of other comprehensive income.
Like T2 Schedule 100 (T2SCH100): Balance Sheet GIFI Codes, Schedule 125 is how a corporation reports its financial statement information with the T2. Where paper filing is permitted, a corporation that does not use return preparation software and has gross revenue and assets each under one million dollars can use Form T1178, the GIFI-Short, instead.
Key lines
The income statement bands, and the items a small service corporation meets. The whole system, with links to each range, is in GIFI codes by range.
| GIFI range | Section | Items a small corporation actually uses |
|---|---|---|
| 8000-8299 | Revenue | 8000 Trade sales of goods and services, 8089 Total sales of goods and services, 8090 Investment revenue, 8140 Rental revenue, 8230 Other revenue, 8299 Total revenue |
| 8300-8518 | Cost of sales | 8300 Opening inventory, 8320 Purchases/cost of materials, 8340 Direct wages, 8360 Trades and sub-contracts, 8500 Closing inventory, 8518 Cost of sales |
| 8519 | Gross profit or loss | Item 8089 less item 8518 |
| 8520-9367 | Operating expenses | 8521 Advertising, 8523 Meals and entertainment, 8622 Employer's portion of employee benefits, 8670 Amortization of tangible assets, 8690 Insurance, 8710 Interest and bank charges, 8810 Office expenses, 8860 Professional fees, 8910 Rental, 8960 Repairs and maintenance, 9060 Salaries and wages, 9220 Utilities, 9225 Telephone and telecommunications, 9270 Other expenses, 9281 Vehicle expenses, 9367 Total operating expenses |
| 9368-9369 | Totals | 9368 Total expenses, which is item 8518 plus item 9367; 9369 Net non-farming income, which is item 8299 less item 9368 |
| 9370-9899 | Farming | A separate set of farming revenue and expense items, with 9659 Total farm revenue and 9898 Total farm expenses as their totals |
| 9970-9999 | Extraordinary items and taxes | 9970 Net income/loss before taxes and extraordinary items, 9975 Extraordinary item(s), 9990 Current income taxes, 9995 Future (deferred) income tax provision, 9998 Total other comprehensive income, 9999 Net income/loss after taxes and extraordinary items |
The items CRA requires. On the income statement side, item 8299 Total revenue and item 9368 Total expenses have to be reported when there is no farming activity, and item 9999 always has to be reported. A required item may be nil; enter 0 rather than leaving it blank. CRA checks that total revenue less total expenses equals net non-farming income.
Revenue detail. CRA wants revenue split by the activity that earned it. A consulting corporation reports at item 8000. A corporation whose income is rent uses item 8140. Interest and dividends earned on the side are investment revenue at item 8090, not trade sales. A manufacturer reports at item 8000 and uses the cost of sales items in the 8300 band.
Schedule 100 and Schedule 125: how they tie together
The two schedules meet at net income, and the retained earnings section of T2 Schedule 100 (T2SCH100): Balance Sheet GIFI Codes is the hinge.
Schedule 125 ends at item 9999. Schedule 100's retained earnings section opens at item 3660 with the balance at the start of the year, adds item 3680 net income or loss, subtracts item 3700 dividends declared, and closes at item 3849. Item 3680 should carry the same amount as item 9999 here, and item 3849 should equal item 3600, the retained earnings shown inside shareholder equity on the balance sheet.
Two mistakes hide in that sentence. The first is tying Schedule 125 to item 3640; item 3640 is Total liabilities and shareholder equity, not net income. The second is forgetting item 9998. When total other comprehensive income is reported, item 3680 equals item 9999 plus or minus item 9998, and only then do the two numbers legitimately differ.
Example
A consulting CCPC’s 2026 income statement maps to Schedule 125 as follows. The $4,600 tax provision is an assumed book amount; this mapping example does not calculate the corporation’s final tax liability. Revenue and cost of sales:
| Trial balance item | Amount | GIFI | GIFI name |
|---|---|---|---|
| Consulting revenue | 211,500 | 8000 | Trade sales of goods and services |
| Total sales of goods and services | 211,500 | 8089 | Total sales of goods and services |
| Total revenue | 211,500 | 8299 | Total revenue |
| Subcontractor fees | 45,000 | 8360 | Trades and sub-contracts |
| Cost of sales | 45,000 | 8518 | Cost of sales |
| Gross profit | 166,500 | 8519 | Gross profit/loss |
Operating expenses:
| Trial balance item | Amount | GIFI | GIFI name |
|---|---|---|---|
| Salaries and wages | 60,000 | 9060 | Salaries and wages |
| Employer CPP, EI and WorkSafe premiums | 6,000 | 8622 | Employer's portion of employee benefits |
| Office rent | 30,000 | 8911 | Real estate rental |
| Meals and entertainment | 6,000 | 8523 | Meals and entertainment |
| Vehicle expenses | 5,000 | 9281 | Vehicle expenses |
| Office expense | 4,800 | 8810 | Office expenses |
| Utilities | 3,600 | 9220 | Utilities |
| Professional fees | 3,200 | 8860 | Professional fees |
| Amortization | 3,000 | 8670 | Amortization of tangible assets |
| Telephone and internet | 2,400 | 9225 | Telephone and telecommunications |
| Business insurance | 2,000 | 8690 | Insurance |
| Advertising | 1,000 | 8521 | Advertising |
| Bank charges and loan interest | 900 | 8710 | Interest and bank charges |
| Total operating expenses | 127,900 | 9367 | Total operating expenses |
And the close:
| Trial balance item | Amount | GIFI | GIFI name |
|---|---|---|---|
| Total expenses | 172,900 | 9368 | Total expenses |
| Net income before taxes | 38,600 | 9970 | Net income/loss before taxes and extraordinary items |
| Current income taxes | 4,600 | 9990 | Current income taxes |
| Net income after taxes | 34,000 | 9999 | Net income/loss after taxes and extraordinary items |
Item 9368 at 172,900 is item 8518 at 45,000 plus item 9367 at 127,900. Item 8299 at 211,500 less item 9368 at 172,900 leaves 38,600. And the 34,000 at item 9999 is the same 34,000 reported at item 3680 on Schedule 100.
Common mistakes
Reporting 100% of ordinary client meals at item 8523 and forgetting the normally applicable 50% add-back on Schedule 1. Net Income for Tax. Schedule 125 is the books, not the tax return. The restriction is a Schedule 1 adjustment, not a book adjustment.
- Using item 9975 for an ordinary gain or loss. Item 9975 is Extraordinary item(s), which CRA defines narrowly: events that do not recur, do not typify normal business activity, and do not depend on management's decisions. Ordinary items belong in the revenue or expense band.
- Reading item 9970 as the extraordinary items line. Item 9970 is Net income/loss before taxes and extraordinary items; extraordinary items themselves start at 9975.
- Filing income taxes under the wrong items. Current income taxes are item 9990 and the future or deferred provision is item 9995. Items 9975 and 9976 are extraordinary items and legal settlements.
- Coding telephone and internet to item 9224. That item is Fuel costs, for heating and cooking fuel. Telecommunications is item 9225.
- Coding software subscriptions to item 8811, which is Office stationery and supplies. Use item 8810 Office expenses, or item 8813 Data processing if the amount is worth separating.
- Including tax CCA on Schedule 125. Schedule 125 shows book amortization at item 8670. The tax claim is computed on Schedule 8. Capital Cost Allowance and reconciled through Schedule 1.
- Reporting revenue gross of GST/HST when the corporation is registered. Under regular GST/HST accounting, sales tax collected is a liability at item 2680, not revenue. Quick Method accounting requires a separate reconciliation of the amounts collected and remitted.
- Letting item 9999 drift from item 3680 on Schedule 100 because dividends declared were posted through the income statement instead of through retained earnings at item 3700.
Official source
CRA RC4088: GIFI codes, required totals and statement reconciliation.
Related concepts
Sources
- CRA Form T2SCH125
- CRA GIFI Guide RC4088
- Income Tax Act s.150(1)
See also
Keep the books behind these numbers current.
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