Qualification
T1 General
Also known as: T1, Personal income tax return
The Canadian personal income tax return, filed annually with CRA. The T1 reports total income, deductions, taxable income, and tax owing. For any self-employed or business-owner mortgage file, the T1 is the first document the lender asks for.
The line that matters most for qualifying purposes is line 15000 (net income). This is the number most banks read off the return: it's your gross income less all the deductions (RRSP, professional fees, business expenses, capital cost allowance, business-use-of-home, vehicle expenses). If you've been tax-efficient, line 15000 can be substantially below the cash flow your business actually generates.
The right lender for a self-employed file knows which T1 deductions to add back to get to a more honest income figure. See add-backs for the mechanics, and the bank's blind spot for the broader strategy.
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