Alberta.ca » Income and Employment Supports Policy Manual


Expected to Work/Barriers to Full Employment Policy & Procedures

Published Date: April 24, 2012
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11 Income

Self-Employment Income

AUTHORITY

Income Support, Training and Health Benefits (ISTHB) Regulation, Section 23(3)(b), (4)(a), (c), and (5)(b)

POLICY

Self-Employment Income
Self-Employment income means all self-employment income, including income earned from a home-based business.

All net self-employment income is deducted dollar for dollar from program benefits, and is coded as 4303 Self-Employment.

There are exceptions, depending on the client type or business type, where exemptions can be applied to some self-employment income:

  • An Income Exemption is applied to Self-Employment Income for:
    • the adult member providing child care in their own home;
    • the adult member in the Barriers to Full Employment (BFE) category operating a home-based business; and
    • any dependent child operating a home based business.
  • For those who are eligible to receive the earnings exemption, the self-employment income is coded as 4104 for the Head of Household 4105 for a Partner, and 4103 for Dependent Child(ren).


Self-Employment Expenses

All self-employment applicants and recipients are allowed to deduct specified expenses from gross self-employment income to calculate net self-employment income.

Allowable deductions to determine net self-employment income are as follows:

  • All employment related deductions defined under ISTHB Regulation, Section 23(4); and
  • All deductions required by law, including business taxes and business license fees; and
  • Reasonable cost of materials, supplies, goods and services that are essential to the business or farm operation, specifically:

     

    • Interest (but not principal) payments on a loan made for the purpose of the business

       

    • Advertising costs, accounting and legal fees, bank service charges

       

    • Insurance, license, rental, repair and operating expenses of motor vehicles and equipment essential to the business operation

       

    • Delivery, express and freight charges including postage

       

    • Veterinary services related to the business or farming operation

       

    • Business-related facility costs:

       

      • lease payment
      • mortgage interest but not principal payment,
      • property tax,
      • fire insurance,
      • liability insurance,
      • telephone,
      • utilities, and
      • reasonable maintenance and repairs


Substantiation

The business person or farmer reports net self-employment income and changes in assets through their monthly reporting.  To assist clients in determining their net self-employment income, clients may complete the EMP 5515 Net Self-Employment Income form. The worker may ask them to submit this document as substantiation of net self-employment income.