Revenue vs. Net Income (Profit): The Quebec/Canadian Perspective

While the core concepts of total sales and remaining profit are universal, the terminology and tax implications in Quebec and Canada—especially for self-employed individuals (travailleurs autonomes)—require specific clarity.

Here is a breakdown of the three key concepts for your business.

1. Revenue (Gross Revenue / Sales Revenue)

This term refers to the total amount of sales or services invoiced over a specific period. It is the core indicator of your business volume.

• Definition: The total money earned from your main business activities before subtracting any operating expenses.

• Terminology in Canada/Quebec: Often referred to as Gross Revenue or Sales Revenue in financial statements.

• The Crucial Tax Point (GST/QST):

  • This revenue is usually calculated excluding the GST and QST that you collect for the governments (Federal and Provincial).

  • If your Gross Revenue exceeds $30,000 in any 12-month period, you are required to register for and charge the GST (Federal) and QST (Quebec) (Small Supplier Rule).

Simple Example: If you sell $5,000 worth of services before taxes, your Gross Revenue is $5,000. This is the figure you use to check the $30,000 tax threshold.

2. Net Income (Profit / Net Business Income)

This is what remains after all operating costs have been paid. This is the true measure of your profitability and is the amount on which you are taxed.

A. Net Business Income (Net Profit)

This is the amount on which you will be taxed personally (if you are self-employed) or corporately (if you have a corporation).

Net Income (Profit)=Gross Revenue−Total Operating Expenses

• Allowable Expenses: To determine your taxable Net Income, you subtract all reasonable operating expenses incurred to earn that income (e.g., hosting, software, advertising, home office expenses, etc.).

• Self-Employed (T4A): For the self-employed, this Net Business Income is considered personal business income and is reported on your provincial (Revenu Québec) and federal (CRA) tax returns.

• Tax Impact: This Net Income is subject to progressive income tax brackets (both Federal and Quebec), as well as mandatory contributions like the RRQ (Quebec Pension Plan) and RQAP (Quebec Parental Insurance Plan).

Simple Example: If your Gross Revenue is $5,000 and your deductible expenses are $1,000, your Net Income (Profit) is $4,000. You are taxed and contribute based on this $4,000 amount.

📊 Summary Table for Quebec/Canada

Term	Simple Definition	Tax Use	What it Measures
Revenue / Gross Revenue	Total money received from sales/services (before expenses, excluding GST/QST).	Determines the GST/QST threshold ($30,000).	Your business Volume and market demand.
Net Income / Net Profit	What is left after deducting all allowable business expenses.	The amount used to calculate personal/corporate Income Tax and social Contributions (RRQ/RQAP).	Your actual Profitability and take-home earnings.

Conclusion

In Quebec, an entrepreneur must pay close attention to both figures:

1. Monitor Gross Revenue to ensure they do not exceed $30,000 without being registered for taxes.

2. Manage Expenses carefully to maximize Net Income (Profit), as this figure determines their true earnings and tax burden.

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