Sophie operates a successful sole proprietorship as a graphic designer. When applying for a mortgage, her lender requires proof of income. Which of the following income verification methods would typically be considered acceptable for a self-employed individual in Canada?

Question: Sophie operates a successful sole proprietorship as a graphic designer. When applying for a mortgage, her lender requires proof of income. Which of the following income verification methods would typically be considered acceptable for a self-employed individual in Canada?

Answer options:

• A T4 Employment Income Statement and recent pay stubs.
• A formal letter from Sophie's accountant confirming projected income for the next 12 months. ✅ Two years of filed Notice of Assessments (NOAs) and corresponding T1 General Income Tax Returns.
• Bank statements showing consistent deposits into her business account for the past 6 months.

Correct answer: Two years of filed Notice of Assessments (NOAs) and corresponding T1 General Income Tax Returns.

Explanation: For self-employed individuals, lenders typically require two years of filed Notice of Assessments (NOAs) and T1 General Income Tax Returns to establish a consistent, verifiable income history. T4s are for employed individuals, and projected income letters or bank statements alone are usually insufficient.