What is an Industry Code?
Your industry code helps the Canada Revenue Agency (CRA) classify what is the source of your self-employment income. Typically, the CRA, and Statistics Canada use industry codes for statistical purposes but the CRA also uses these codes in order to compare similar businesses within the same industry – their annual income, expenses claimed – which helps them discover trends which may be helpful in their auditing processes.
Industry codes are established and maintained by Statistics Canada and use the North American Industry Classification System (NAICS), which is a comprehensive system encompassing all economic activities. Industry codes are grouped into broad categories, also known as generalized codes. The generalized codes are then subdivided into very specific industries.
How Do I Choose My Industry Code?
The Canada Revenue Agency (CRA) asks that you choose a code from the generalized list of codes and to choose your code, establish what the main activity of your business is, and find the code that comes closest to it.
The NAICS system is structure under classes of industry. You will decide what class of code you fall under by clicking on the 2-digit code, which generalizes the initial industry, then this will open a new class within the initial one entered, you then continue to click on each entry until you end up with a complete 6-digit code.
If there still is no specific code for exactly the kind of work you do; simply choose the code that matches best. In every classification, there will always be an “other” category, which may be your best option if none fall under what it is specifically that you do.
If, for example, you do more than one thing in your business, choose a code that matches your work’s main activity.
An example of that scenario might be; someone who operates a bookstore in which postage stamps are also sold. In this scenario, the most appropriate industry code would be 451310 (for sales – bookstores and news dealers), and not 491110 (for services – postal services).
You should use the same code every year, unless your business changes drastically. However, the NAICS codes are updated occasionally, so you may have to change the code you use in that case.
Where Can I Find the List of Industry Codes to Choose From?
If you are filing your return through TurboTax Self-Employed, complete the “Profile” section firstly then under the “Income” tab, open the “Self-Employment” section (T2125), click on the “Industry code” link, which will bring you to the NAICS site, as explained above.
You can also find a complete list of codes, in different formats on the Statistics Canada website.