![]() The inclusion rate increases to 40% in the second tax year that starts after March 21, 2017, 60% in the third year, 80% in the fourth year, and 100% in the fifth and all subsequent tax years.įor more information, see Guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income. Generally, for the first tax year that starts after March 21, 2017, you must include 20% of the lesser of the cost and the fair market value of WIP. If you elected to use billed-basis accounting for the last tax year that started before March 22, 2017, the transitional rules allow you to include your WIP into income progressively. Work-related meals can qualify as a business expense. However, if you have a tax year that begins after March 21, 2017, you can no longer elect to exclude amounts for WIP. Plus, it can make tax filing easier because depreciation is a tax-deductible business expense. If you have a professional practice and you are an accountant, dentist, lawyer, medical doctor, notary, veterinarian, or chiropractor, you can elect to exclude your work-in-progress (WIP) when you determine inventory. Inventory is used to calculate the cost of goods sold and net income on Form T2125, Statement of Business or Professional Activities. If you are a manufacturer, this includes raw materials as well as packaging material and supplies, work-in-progress (goods and services that you have not yet completed at the end of your fiscal period), and finished goods that you have on hand. This is usually a list of goods held for sale.
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