When claiming expenses for your business it’s important to keep all receipts or invoices pertaining to the expenses you want to claim.
You can deduct any reasonable current expense you paid or will have to pay to earn business income, although some expenses do have limitations. The amount you can deduct depends if it is considered a current year expense or capital expense. The expenses you can deduct include any GST/HST you incur on these expenses less the amount of any input tax credit claimed. Deduct only the business part of expenses from business income, you cannot deduct personal expenses. In addition, you cannot claim expenses you incur to buy capital property.
Can Deduct:
- Interest on Loans.
- Business Fees
- Insurance.
- Allowance on eligible capital property
- Capital Cost Allowance (CCA).
- Bad debts
- Business start up costs
- Leasing Costs.
- Travel required for business purposes if not already reimbursed, such as flights, ferry, bus or train.
- Meals and entertainment (Up to 50% of claim).
- Lodging for all employees if required to be away from normal place of business and more than 12 consecutive hours.
- Salaries, wages, and benefits ( including employer’s contributions)
- Training pertinent to business purposes.
- Medical expenses from employee benefits program, such as dental, eye care, and physical care (physiotherapy, chiropractor, RMT’s, etc.)
- Rent, utilities, telephone and property taxes used for your business portion only.
- Motor Vehicle Expenses & Fuel costs for your business.
- Repairs & Maintenance.
- Advertising & Promotions.
- Accounting & Legal fees.
- Management & Administration Fees.
- Office Expenses & Supplies.
- Prepaid Expenses
- Other Operating expenses such as materials, subcontractors, etc.
- Gifts for holidays or special occasions, such as gift cards, gift baskets or other tangible items.
Can’t Deduct:
- Holidays or Personal Vacations.
- Local travel (to and from work).
- Personal use of a vehicle, special rules apply if the vehicle is owned by a company.
- Clothing.
- Alcohol.
- Interest or penalties paid on your income tax.
- Most fines and penalties.
- Boats, unless required for business activities.
- Too much in gifts (limit up to $500/year).
- Food-based businesses can’t claim meals within that business.
Some helpful links include:
Current or Capital Expense
Basic Information About Capital Cost Allowance (CCA)
T2125 Statement of Business or Professional Activities
For more information please call our office at (250) 334-3797 or send us an email at office@ashcroftassociates.ca
